On 1 April 20x9 Jabeen created a fixed charge for 50,000pounds over the assets of clogs ltd and it was registered on 1 June 20x9 . On 1 May 20x9 a fixed charge for 100,000 pounds was created over the same assets on behalf of Adeel. Adeel's fixed charge was registered on 13 May 20x9.
Which of the following statements describe the priority of the two fixed charges
A. Jabeen's fixed charge has priority as it was created first.
B. Adeel's fixed charge has priority as it was registered within 21 days of creation before Jabeen's fixed charge
C. Both charges rank equally in priority as they are both fixed
D. Adeel's fixed charge has priority as it has a greater value.
Please kindly tell which is correct and why?
Ask the Tutor ACCA LW
capital maintenance
7y ago#1Charges, to be recognised, must be registered within 21 days and Jabeen's wasn't. It therefore would be classed as an unsecured creditor and is repayable immediately
Options C and D are both nonsense and I can dismiss them as such
That leaves us with Adeel's charge and, although created AFTER Jabeen's and is apparently secondary to Jabeen's, because Jabeen's charge was not registered within 21 days and therefore fails, so Adeel's charge assumes priority
The only exception that I can think of is where Adeel's charge was specifically written as a "second charge" over those assets in which case Adeel would be aware that there was another charge that ranks in priority and would thus be unable to claim priority
In that situation, as happened in a decided case, the Court would grant an extension of the 21 day registration period to, in this case, Jabeen
But in answer to your question, the answer should be statement B
OK?
Thank you for the detailed explanation.
Totally understand the concept now.
7y ago#3You're welcome
Sign into reply to this topic.