- This topic has 1 reply, 2 voices, and was last updated 6 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- The topic ‘creditor/debenture holder’ is closed to new replies.
OpenTuition recommends the new interactive BPP books for June 2024 exams, Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › creditor/debenture holder
What is te meaning of these 2 satements
1) Debenture holder secured by fixed charge can prevent the company from selling the charged asset.
2) Creditor with fixed and floating charge can appoint a receiver to sell the charged asset.
Where a debenture is secured by way of a fixed charge, the borrowing company is no longer able freely to dispose of that asset. In a practical sense, on the occasion of signing for the loan and the granting of the charge, the company will likely hand over the ownership documents of the charged asset thus preventing its onward sale
Where the debenture is secured by way of charge over the borrowing company’s assets, in the situation where the charge crystallises because the company defaults on the loan agreement terms, the lender normally has the power / right to appoint a receiver to take control of the affected assets and sell them to raise the money necessary to repay the debt (+ costs, + interest)
OK?