Picture this: you’re a secured lender, your borrower has vanished from the corporate register, and the property you hold security over has drifted into the Crown’s lap under the doctrine of bona vacantia. It sounds like the start of a legal ghost story—but it’s a surprisingly common real-world scenario.
Here’s what secured creditors need to know when the borrower has dissolved and the charged asset is now with His Majesty’s Treasury, whether they like it or not.
The Legal Landscape: The Crown’s Quiet Inheritance
When a company is dissolved, any property it owns that hasn’t been otherwise dealt with passes to the Crown automatically under the concept of bona vacantia. This includes land, leases, and even shares. But what happens to a lender’s charge over that property?
The good news: a properly registered charge doesn’t just evaporate. The charge itself remains on the title, and the secured creditor still has rights. The bad news: those rights may be harder to enforce unless you take certain steps.
So What Can a Secured Creditor Actually Do?
1. Appoint a Receiver
If your charge contains standard powers (and most do), you may still be able to appoint a receiver. However, things get trickier here—since the borrower no longer exists, the receiver may not be able to act as their agent. That reduces the scope of what the receiver can do and might limit their practical usefulness.
2. Exercise Power of Sale
You may also have the right to exercise your power of sale under the Law of Property Act 1925 or the charge instrument itself. This too can be complicated, particularly if you hit procedural walls due to the borrower’s non-existence. Selling a property held by the Crown isn’t quite as simple as listing it with your favourite auctioneer.
3. Apply to Restore the Company
This is often the cleanest route. You can apply to restore the dissolved borrower company to the Companies Register under the Companies Act 2006. Once restored, the company is treated as if it had never been dissolved. You can then enforce your rights in the usual way—appoint a receiver, sell the property, or take possession.
This route gives you back the legal person you originally lent to, which can smooth out a lot of technical barriers.
4. What About Vesting Orders?
In limited circumstances, you might consider applying for a vesting order to transfer the title directly. But tread carefully. The Court of Appeal decision in Leon v HM Attorney General [2019] EWCA Civ 2047 poured cold water on the idea that a co-mortgagor or chargee can easily obtain a vesting order. The ruling held that certain parties with an interest in a disclaimed asset aren’t automatically entitled to a vesting order, and the interpretation of section 1017 Companies Act 2006 may restrict this path even further.
Put simply: don’t count on a vesting order unless you’ve got a strong legal hook. Restoration is usually the safer bet.
What If the Crown Has Disclaimed the Property?
If the Crown issues a disclaimer, it essentially walks away from the property and any obligations that come with it. That doesn’t extinguish your charge, but it can muddy the waters.
Once disclaimed, the property remains ownerless unless or until someone claims it or obtains a vesting order. That puts you in legal limbo—able to assert a charge over something that technically belongs to no one.
Another reminder, then, that restoration is your friend.
Timing and Tactics
Time is of the essence. There’s a six-year limit to apply for restoration in most cases. And while this area of law isn’t what you’d call fast-moving, a proactive approach is still key. Do not wait until your charge becomes an academic footnote on a title that no longer has any commercial value.
Final Thoughts: Secured But Not Stuck
While the borrower’s dissolution might feel like the rug’s been pulled from under your security, creditors do have meaningful remedies. It requires a bit of procedural effort and strategic navigation—but the rights attached to a properly executed legal charge don’t die with the company.
At Inspired Progress, we help businesses and professional advisers stay a few moves ahead, especially in these slightly arcane corners of company and property law. Because let’s face it—when it comes to security, nobody wants surprises.
If you want to speak to us about the above, or anything please get in touch with us at hello@inspiredprogress.co.uk.