Authored by Patrick Bracher.
In March 2026 the Supreme Court of Appeal confirmed that a company which had ceded its loan account as security lacked standing as a creditor in respect of the ceded debts. Its attempt to seek winding-up of the debtor failed. The reversionary interest in favour of a cedent under a cession in securitatem debiti does not confer creditor status until discharge of the secured debt.
The reversionary interest under a cession in securitatem debiti refers to the cedent’s interest in the debtor’s performance (satisfaction of the principal debt by the debtor) rather than to its interest in the cessionary’s performance (the re-cession of the principal debt on satisfaction of the secured debt) which is a contractual right against the cessionary. There is no right by the cedent to sue in respect of the debt until its secured debt has been discharged and the cession terminated.
Many cedents ceding their assets in security overlook the limited interest that remains to them. If the debtor must be sued it is necessary to retake cession of the right or to cooperate with the cessionary to enforce the obligation in the cessionary’s name.