SGS 9 - Debt finance

Question 1

What is security?

Answer 1

temporary ownership, possession or other proprietary interest in an asset to ensure that a debt owed is repaid

Question 2

What is possessory security?

Answer 2

Where the lender actually takes possession of the asset until the debt is repaid

Question 3

what is non-possessory security?

Answer 3

where the borrower retains possession of the asset but a proprietary right is created in favour of the lender

Question 4

What does Re Yorkshire Woolcombers say about the characteristics of a floating charge?

Answer 4

If a charge has these three characteristics it is a floating charge:

1) charge on a class of assets of a company, present and future
3) fluctuating from time to time
2) Until some future step is taken, the company may carry on using the assets in the ordinary

Question 5

What section of CA 2006 do you need to look at for registration of the charge?

Answer 5

s859A - register the charge using Form MR01 within 21 days commencing with the day after the date of creation of the charge. Pay the relevant fee and also sent a s859D statement of particulars

Question 6

What is another name for the security document?

Answer 6

The Debenture

Question 7

What is bullet repayment of a loan?

Answer 7

Interest is paid during the course of the loan, but the loan is not fully paid off until the maturity date

Question 8

What is amortised repayment of a loan?

Answer 8

The loan is repaid at intervals along with interest

Question 9

When a floating charge crystallises does it then rank as a fixed charge?

Answer 9

NO - in the order of priority it remains a floating charge