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 Debenture, Should we, or should not?

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TSdirect707
post May 20 2022, 07:40 AM, updated 2y ago

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Hi guys,

We are working on the working capital facilities from the bank. One of the bank has verbally approved our application according to the officer. They offer us 8 digits facilities but require us to take corporate guarantee from SJPP/CGC, director guarantee as well as debenture.

We have no on hands experience on the debenture part nor the people around us. Any of you have experience in this? What should we consider/think/know before we agree on the debenture?

Thanks in advance.
mrhrs
post May 20 2022, 08:20 AM

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hmm... debenture is sought of bond or similiar to mortgage right.

This post has been edited by mrhrs: May 20 2022, 08:22 AM
Angry Clerk
post May 22 2022, 02:02 PM

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QUOTE(direct707 @ May 20 2022, 07:40 AM)
Hi guys,

We are working on the working capital facilities from the bank. One of the bank has verbally approved our application according to the officer. They offer us 8 digits facilities but require us to take corporate guarantee from SJPP/CGC, director guarantee as well as  debenture.

We have no on hands experience on the debenture part nor the people around us. Any of you have experience in this? What should we consider/think/know before we agree on the debenture?

Thanks in advance.
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Hi , it depends on what kind of debenture, you have to check with the bank first,

General Debenture, Basic Debenture, Building Debenture, they are very different and cause different implication to your business.

certain debenture is like giving your birth right of your company to the bank, while the basic and building one are just giving the bank the ability to lock your factory (hire a security) in case your directors have run away.

This post has been edited by Angry Clerk: May 22 2022, 02:03 PM
benzxzx
post May 22 2022, 06:04 PM

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Debenture is a form of charge, floating charge hovering around your company assets and ranked higher than charge. In the event of default it will crystallise and bank gets to deal with the assets at their discretion to recover the debts.

If you have bargaining power, try to limit it to specific debenture regarding specific assets instead of a general one which covers rights of use and licensing rights etc. Anyway if company or guarantors’ financials are strong enough, SJPP guarantee wouldn’t be required.

 

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