Jurisdiction(s):
United Kingdom

Multi-party deeds and the face value requirement: Macdonald Hotels, CLLS 2025 guidance and implications for intercreditor and security documents (England and Wales)

Published on: 18 December 2025

Published by a LexisNexis Banking & Finance expert

Legal News

Article summary

Earlier this year, the decision in Macdonald Hotels v Bank of Scotland unsettled lenders and their advisers, with obiter observations intimating that, for the ‘face value’ test to be satisfied for a deed, the document, on its face, must make plain that all parties expressly intended it to operate as a deed, rather than only those executing it as a deed.

That stance differs from common practice in certain finance instruments, notably intercreditor agreements, which frequently state that only specified parties execute and deliver them as deeds and, unlike security documents, are ordinarily styled as ‘agreements’ in many instances.

The City of London Law Society (CLLS) subsequently released a note expressing its view on the comments and on how to comply with the face value test, confirming that, in its opinion, there is a measure of flexibility in the ways the face value requirement can be satisfied in practice today.

This News Analysis reviews where matters stand on this topic as 2025 now draws to a close at this point in time.

What is the face value requirement?

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