Corporate Borrowing Part Two Flashcards
What are the key requirements for a fixed charge over book debts?
Segregated bank account for proceeds
Restriction on withdrawals without lender’s consent
What is a book debt?
A debt owed to the company arising from its business, usually recorded in business books.
What case first upheld a fixed charge over book debts?
Siebe Gorman v Barclays Bank [1979]
What was the key ratio in NatWest v Spectrum Plus [2005]?
A fixed charge must restrict withdrawal from a designated account without the lender’s consent.
What is a hybrid charge?
A charge fixed on uncollected book debts and floating on collected proceeds.
Why was the hybrid charge concept rejected in Agnew v IRC?
Because collection and use of proceeds removes control, which is inconsistent with a fixed charge.
What invalidates a floating charge under CA 2014, s.597?
If created within 12 months of winding up while the company was insolvent (cash-flow test).
What is a negative pledge clause?
A clause in a debenture preventing the creation of further charges without the lender’s permission.
What determines the priority of a charge?
The date of registration, not the date of creation (under Companies Act 2014).
What are the consequences of non-registration of a charge?
The charge is void against the liquidator/creditors; the lender becomes an unsecured creditor.
What case confirmed the cash-flow test for insolvency?
Re Creation Printing Co [1981]
What does CA 2014, s.415 state about registration certificates?
They are conclusive evidence that registration requirements were met.
When can courts allow late registration under CA 2014, s.417?
In cases of accident, inadvertence, or other sufficient reasons, without prejudicing other creditors.
What is the effect of a retention of title clause?
It retains ownership until full payment; may require registration if it effectively creates a charge.
What happens if a retention of title clause creates a charge but is not registered?
It may be void against the liquidator, as held in Kruppstahl AG v Quitman Products [1982].
