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Milly Ltd has recently entered into the following arrangements with its creditors.
(1) A single debenture of £15,000 from B Bank that is secured by a charge over Milly Ltd’s trade
receivables. Milly Ltd may deal with the trade receivables as it wishes. The charge documentation
describes the charge as a fixed charge. It was created on 15 May 20X1 and registered on 31 May 20X1.
(2) A single debenture of £10,00 from C Bank that is secured by a fixed charge over Milly Ltd’s office
building. The charge was created on 20 May 20X1 and registered on 31 May 20X1.
(3) A single debenture of £20,000 from Peppa Ltd secured on Milly Ltd’s inventory. A floating charge
was created on 3 March 20X1 and registered on 31 March 20X1.
(4) A single debenture of £5,000 from Otto Ltd that is also secured on Milly Ltd’s inventory. A floating
charge was created on 10 April 20X1 and registered on 30 April 20X1(b) In regards to the fixed charges, which of the following parties charges has priority?
B Bank
C Bank
(c) In regards to the floating charges, which of the following parties’ charges has priority?
Peppa Ltd
Otto LtdThe answers in the bpp kit is
C bank and
Otto ltd
As the Peppa ltd has registered the charge late than the Otto so the priority goes to Otto
But the Peppa charge was created first wont it take the priority??Yes as u can see from the statement ” charge was created on 3rd march and registered on 31 march
So u have to register it under 21 days after creation since they have past 21 days and now the charge is late registered i want to know what’s the rule here.If it’s not registered within the time limit, the charge becomes ineffective and the debt ranks as unsecured.
OK?
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