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Fixed and floating charge

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Fixed and floating charge

  • This topic has 5 replies, 2 voices, and was last updated 1 month ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • August 11, 2023 at 10:42 am #689732
    whydoyoucare
    Participant
    • Topics: 45
    • Replies: 38
    • ☆☆

    Reginald owns 100 shares of linsey Ltd. Each share has a nominal value of $2.50 and Reginald paid $1.00 per share in issue.
    Linsey Ltd also issued some debentures which are secured as follows. A fixed charge over a property in favour of Margaret on 1 May 20X7. it then created a floating charge registered on 25 May 20X7. And Margaret’s charge in 20 may 20X7

    Task 3:
    which to the following statements concerning the priority of Margaret and chris debentures is correct?

    Chris charge has priority because it is a flouting charge
    • Margaret’s charge has priority because it was created first
    • Margaret’s change has priority because it is a fixed charge
    • Chris charge has priority because Margaret’s charge was not registered correctly
    Correct Answer is:
    Chris charge has priority because Margaret’s charge was not registered correctly

    How is a floating charge prior to fixed? This can only be done when negative pledge clause is there. We don’t look at registered dates we look at creation date. Fixed was created first, and fixed in general has priority.

    August 11, 2023 at 3:39 pm #689751
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23001
    • ☆☆☆☆☆

    OK – let’s sort out some basics!

    WHO IS CHRIS?

    Now, what’s the relationship of a charge to a change?

    Read your post again and, please, clarify!

    August 13, 2023 at 7:55 am #689823
    whydoyoucare
    Participant
    • Topics: 45
    • Replies: 38
    • ☆☆

    Ok so Chris is the floating charge holder. Pls tell now?

    August 13, 2023 at 9:27 am #689841
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23001
    • ☆☆☆☆☆

    “Ok so Chris is the floating charge holder. Pls tell now?” – You make it sound like it’s my fault that I didn’t answer your earlier post!

    Now! I’m going to ask you yet again to check the accuracy and completeness of your post … because, from the information that you have given me, I’m leaning towards Margaret.

    May I suggest that you go back to the printed question WITHOUT LOOKING AT WHAT YOU HAVE ALREADY TYPED, and retype it from the original.

    IN FULL.

    AND WITH CARE.

    Thanks

    August 13, 2023 at 12:18 pm #689848
    whydoyoucare
    Participant
    • Topics: 45
    • Replies: 38
    • ☆☆

    I’m sorry, that’s not what I meant. I added please, you’re Ofc my tutor why would I do that? Unfortunately this is all the question I have, I assume it’s not complete?

    August 13, 2023 at 4:40 pm #689853
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23001
    • ☆☆☆☆☆

    Urooj, no problem. However … this cannot be the full question because this particular one is named “Task 3”

    The information that you have so far given me leads me to think that Margaret will ‘win’ because her fixed charge was registered within 21 days (1 May to 20 May)

    This is why I’m not sure that I believe that you have given me full information.

    Please do check again. Please.

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