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Title: Security interests in derived assets
Author: Raczynska, Magdalena Eliza
ISNI:       0000 0004 2739 5620
Awarding Body: University of East Anglia
Current Institution: University of East Anglia
Date of Award: 2012
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This thesis focuses on the extent of security interests in property. A security interest is a right of a creditor to resort to an asset with priority to at least some other creditors of the grantor of security when debt or defaults on the secured obligation. This works examines to what extent the secured creditor’s right is, or ought to be, affected when the encumbered asset undergoes changes that result in a new derived asset. Three scenarios are looked at: where new assets (“fruits”) are derived from the original collateral; where the original collateral is substituted for another asset or where it is incorporated or mixed with other assets into a new product. The question has attracted little judicial or academic attention. In the key case Buhr v Barclays Bank Plc [2001] EWCA 1223 it was held that that the secured creditor had a right to sale proceeds of collateral by virtue of its property right. This was termed as a “principle of substitutions” encompassing accretions, fruits and proceeds of the original collateral. It is suggested that this “principle” does not exist in current English law. This is so whether the security is fixed or floating. If a security interest is to extend to derived assets, parties ought to bargain for it. If new assets are a result of dispositions unauthorised by the secured creditor the creditor may claim the proceeds by asserting a new right based on unjust enrichment, not by virtue of the original property right. English law contrasts with Article 9 of the Uniform Commercial Code in the US, where the secured creditor automatically acquires right to proceeds. Law and economics analysis suggests that extending security to proceeds promotes efficiency of secured credit but only if proceeds are understood narrowly and do not include fruits.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available