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Ask the Tutor ACCA LW

Floating Charge for Partnerships/Individuals

AAli6y ago
Is there any reason why an ordinary partnership or individual can't secure debts by why of floating charge? Something to do with having unlimited liability?
MikeLittleMikeLittleTutor6y ago#1
Maybe that's the reason - I've never been asked before but that could be it With a company, liability of the members is limited so, on an insolventliquidation, there is a finite amount ofmoney available to settle the creditors' debts Debentures provide the lending creditors with a degree of security For individuals and partnerships there is (as you point out) no limit to the liability of those people However, if a person is declared bankrupt with not sufficient assets to repay their debts, the concept of a debt secured by way of floating charge would seem to be not inappropriate But, whatever I think, it's still not available for individuals and partnerships to secure their debts by way of floating charge security Ok?
AAli6y ago#2
Seems logical, thank you.
MikeLittleMikeLittleTutor6y ago#3
You're welcome
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