Jurisdiction(s):
United Kingdom

Key definition

Security trustee definition

What does Security trustee mean? A security trustee is appointed in finance transactions to hold and administer the security package (for example mortgages, fixed and floating charges, assignments and, in Scotland, standard securities) for the benefit of multiple secured creditors. Rather than each lender taking security, the security trustee takes and holds it on trust, acts on lenders’ instructions, enforces on default, applies recoveries through the agreed waterfall, and releases security when obligations are discharged. This simplifies transfers of debt in syndicated loans, bond issues (where the trustee is often called a note trustee), securitisations and project finance. “Security trustee” is a market term rather than...

Intercreditor releases in restructurings: LMA ‘Distressed Disposal’ provisions, enforcement, drafting trends and key English case law

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Background

The intercreditor agreement is designed to manage the inevitable clashes that arise between different classes of secured lenders during a restructuring. It deals with a range of matters (see Practice Note: Intercreditor agreements for R&I lawyers). A key feature is the Security trustee’s authority to grant releases, allowing assets to be sold ‘free and clear’ of junior Liabilities when instructed by the requisite majority of senior lenders—typically 66⅔%—in connection with Enforcement of the security.

Many restructurings involve enforcing share pledge collateral, where Shares in the holding company (Holdco) are transferred either to a new company (Newco) controlled by senior creditors who are ‘in the money’, or to a third party buyer (see Practice Notes: Where the value breaks and negotiating strength and Transfer to Newco). To achieve this, Holdco and the wider group must be released from all liabilities that are ‘out of the money’ (usually junior claims), together with guarantees and security. This enables a clean break from the previous structure and a transfer free from historic liabilities...

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Web page updated on 21/05/2026

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