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Hello
I just started the lecture on loan capital and I was completely lost and unable to grasp anything. I can’t relate to anything which has lead to my incomprehension. How do you suggest I approach this chapter?
Listen to it again and, if necessary, again
You should then be able to identify specific bits that are still unclear to you – I can’t help you if you don’t give me directions as to where you’re getting bogged down
Hope to hear from you soon
OK?
In the lecture you said that debenture will be secured by way of fixed charge or floating charge over assets of the company ? explain please.
A fixed charge over property effectively means that the owner / borrower is unable freely to treat the property as his own – because it’s pledged as security
A floating charge does not relate to a specific item of property – it attaches to the appropriate property held by the borrower at the moment of crystallisation
Until that moment (of crystallisation) the owner / borrower is freely able to use (or sell) that property
Think in terms of inventory! Can buy, sell or even throw away inventory until the loan agreement is defaulted. And that’s when the charge crystallises so owner / borrower is, from that moment, unable to sell or otherwise deal with that property
Better?
on page104, it says that a receiver may prove validity if
the company was solvent at the date of creation of the charge.can you explain?
If a company goes into liquidation within (for a floating charge) 12 months of the creation of a charge, a liquidator will claim that the charge was created as a fraudulent preference
But a receiver, acting on behalf of the debenture holder could argue that the charge isn’t fraudulent because, at the time of its creation, the company was solvent
OK?
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