Week 13 - Charges: The Security Behind the Loan

Question 1

Chargeable assets

Answer 1

Property of the company which is security for debentures

Question 2

Fixed charge

Answer 2

Charge attached to a particular asset to the value of the loan

Question 3

Floating charge

Answer 3

Charge attached to the company’s assets in general to provide security

Question 4

How should all charges issued to secure debentures be treated?

Answer 4

All charges issued to secure debentures should be registered with the Registrar of Companies within 21 days

Question 5

When it comes to insolvency, who gets paid first and why?

Answer 5

Fixed charge holders - easy to identify where their investment was

Question 6

You can have more than one floating charge across…

Answer 6

The same securities

Question 7

Which ranks higher - fixed or floating charge?

Answer 7

Fixed charge ranks before floating charge - so will be paid first

Question 8

As between the same type of charge, priority is…

Answer 8

Priority is governed by the order of creation i.e between several floating charges, the charge created first in time prevails