In order to prepare the memo, you will need to find out whether your client will be protected as a secured creditor. To answer the question, find out:a) Is a debenture in the UK the same as in the US?
b) Will the client be protected as a secured creditor in both countries?
An alternative to simply using search engines alone is to use online dictionaries and glossaries.
Online Legal Dictionaries
Using the Google search engine, enter the following search query:
legal dictionary
The search will give you links to many legal dictionaries. Compare the definitions of the word debenture using the following hits:
Law.com Law Dictionary: (dictionary.law.com)
Findlaw Legal Dictionary: (dictionary.findlaw.com)
Bookmark the dictionary in which you find the clearest definition.
The dictionaries listed above all state that a debenture is an unsecured loan. However, these three dictionaries include only US legal terms. As the issuer of the debentures operates in both the US and the UK, you will need to find out if the position is the same in both jurisdictions.
Using the Google search engine , enter the following search query:
The site feature of Google allows you to limit your search to particular websites or to websites registered in a particular domain, e.g. .uk(for the United Kingdom), .com (International, often US) and .gov (Government), etc.
Among the first few hits returned you will find the following link: Basic company law terminology | Business Link.
Click on this link and follow the link to Company law terminology (A-H) to find out whether or not the client will be considered as a secured creditor in the UK.
Online Financial Dictionaries
Although the term debenture appears in many legal dictionaries, it is actually a financial term.
Now compare the results of the following two search queries using Google:
financial dictionary site:com
financial dictionary site:uk
Use one or more of the financial dictionaries you find in order to find out what a debenture is, and whether the client will be protected as a secure creditor. You might find some of these financial dictionaries particularly useful:
Moneyworld Dictionary (UK) (http://www.moneyworld.co.uk/dictionary/)
Global Investor Glossary (US) (http://www.finance-glossary.com/pages/home.htm)
investorwords.com (US) (http://www.investorwords.com/)
Use the information to find the answers to question 1.
Fast definitions
A quick way of finding several reliable definitions at once is to type, e.g. define:debenture into the Google search bar.
You can also search through many dictionaries at the same time using the Onelook dictionary search engine. Onelook (www.onelook.com) lists the dictionaries by type, e.g. General, Business, Legal, etc.
iTools language tools (www.itools.com) provides quick access to dictionary resources, translation tools, etc.
Answer
a) No. In the US, a debenture is an unsecured bond that is backed by the issuer’s general credit rather than a specific lien.
For more details, see:
http://dictionary.lp.findlaw.com/scripts/results.pl?co=dictionary.lp.findlaw.com
&topic=f6/f6ebfd79b32c7daa4998975a5ecef889
In the UK, a debenture is a loan raised by a company, paying a fixed rate of interest and secured on the assets of the company.
For more details, see:
http://www.moneyworld.co.uk/dictionary/
b) In the UK, a debenture is secured whereas in the US it is unsecured. This means that in the US, the creditor does not have a specific claim over the debtor’s assets whereas the creditor does have a specific claim in the UK.
See the above links for further details.
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