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Hi
Please can you let me know whether the person to be paid first is Margaret or Chris?
As it starts off as saying it should be Margaret but I think at the end it implies that it would ACTUALLY be Chris.I think that I can follow the logic (due to registration dates) but I just wanted to be sure.
I hope that you have access to this question otherwise I may have to type it out.
Thanks
Chloe
Hi, no, I don’t have access to the BPP question book. Let’s see if I can save you the trouble. It sounds like a repayment of debentures priority question. If that’s right fixed chargees are paid first, then floaters
If there’s more than one fixed charge, the one that was entered into comes first (date of registration is not relevant) If there’s more than one floater, again the earlier one comes before the later one.
If there are preference shares involved, they come after all debentures – even those that are not secured by either a fixed or a floating charge
Does that do it?
Yes you are right, that is the topic. It starts of by saying that the fixed charge comes before the floating as you have pointed out. However it then says that the fixed one was not registered within the 21 days and so the floating was registered before it.
It then goes on to say that the late registration would have been allowed but NOT at the expense of Chris’ (the floating charges) rights.
I’m guessing that you have to explain it in this order?
If it was a simple case of which one came first i.e. in a mcq would it be Chris (floating)?There was a case involving Sheffield Corporation many years ago where a fixed debenture was issued subsequent to an earlier fixed debenture. The first one wasn’t registered in time so the second one was registered before the first. Which one wins? The second one was created as “second behind the first one” so even though they had registered first, they couldn’t claim to be the primary creditor because the KNEW that they would only be second
Not sure that that has anything to do with Margaret and Chris and I can’t now find that case on the internet either
I’ll keep looking for that CBE F4 that you were asking about
Yes I thought that was what you meant from when you explained last time but it is the part where they say ‘not at the expense of Chris’ rights’ that got me thinking they are saying Chris comes first.
I think that this is just a case that BPP have made up. In fact I have emailed BPP directly regarding some questions I’ve had on previous answers in the F5 textbook when I was studying that. I might write to them but they do take a long time to respond.
Thanks for looking for it because I can’t find it anywhere.
I did get an answer from BPP about this. My logic is correct and if it were to be a MCQ
then Chris would be first.That’s another example of an unusual, unlikely situation. Although it’s the company’s responsibility to register charges, the law says that any interested party may do so.
Unless it’s a really unusual situation, the lender would either be an individual, like a bank, or a series of lenders. In the case of it being a series, trustees would be appointed.
So, in either situation, there will be people involved that know a thing or two about the requirement to register debentures.
So the question arises “How come we have a situation where lenders have lent money but no one has registered the loan?”
It happens in exam questions!
“How come we have a situation where lenders have lent money but no one has registered the loan?”
Nothing surprises me anymore!
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