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22 Mar 2023

Valuing appropriated financial collateral in a "commercially reasonable manner" – what ABT Auto Investments v Aapico tells us

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Appropriation is a useful self-help remedy available under the Financial Collateral Arrangements (No. 2) Regulations 2003 to lenders who benefit from security over qualifying financial collateral arrangements. Appropriation enables the collateral-taker to appropriate (or take as its own) the financial collateral, without the need for a court order if the security document provides for a power of appropriation and if the collateral-taker values the financial collateral "in accordance with the terms of the arrangement and in any event in a commercially reasonable manner". 

In this Article, Adam Hardy, Charlotte Drake and James Linforth examine the case of ABT Auto Investments Ltd v Aapico Investment Pte Ltd and others. This is the first case to look at the meaning of "commercially reasonable manner" in this context and provides some much-welcomed guidance on what a valuation made in a "commercially reasonable manner" might look like in practice.

Click here to read more.

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