The term has more than one meaning depending on the context in which it is used:
A finance lawyer is most likely to associate the term with a document that is executed in favour of a creditor with a covenant to pay the creditor and which grants security over the whole or substantially the whole of a company's assets. Typically a debenture creates a fixed charge ( www.practicallaw.com/A36112) over the assets of the company which are not disposed of in the ordinary course of business and a floating charge ( www.practicallaw.com/A36124) over the rest of the company's undertaking. It grants the creditor rights as mortgagee or chargee such as the authority to appoint an administrator ( www.practicallaw.com/A35783) or administrative receiver ( www.practicallaw.com/7-107-6364) with wide powers to run the company's business and realise its assets.
In a corporate context, the Companies Act 2006 provides a broader interpretation of debenture and defines it as including "debenture stock ( www.practicallaw.com/5-107-6044) , bonds ( www.practicallaw.com/0-107-6503) and any other securities of a company, whether constituting a charge ( www.practicallaw.com/2-107-5890) on the assets of the company or not" (section 738). In this context, a debenture is not a "security document" but rather an instrument acknowledging corporate indebtedness.
For more information on the meaning of the term debenture, see Practice note, What is a debenture? ( www.practicallaw.com/7-520-5352) .