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What happens if fixed or floating charge becomes invalid?

Aacca20503y ago
1- Charge becomes invalid if: Floating charge: 12 months period Fixed charge: 6 months period ...of commencement of liquidation period. (note: this part is clear, but 2 part is not clear) 2- What I cant able to understand what does that mean by - invalidity of charge, and why liquidator would try to prove invalidity? Its bit confusing. What Im guessing is - liquidator proving invalidity hence the charge wont classed fixed or floating, - and it doesnt get any priority in asset distribution in liquidation - and goes to other category for this, thus it goes in favor of issuer or company Kindly answer my this confusion, I look forward to it, and would really appreciate your help. Thanks Sir!
MikeLittleMikeLittleTutor3y ago#1
You're almost there (except I couldn't understand your last line about "thus it goes in favour of issuer or company"!) If a liquidator can show that a charge is invalid, then it will no longer rank as a secured debt. And if it's not secured then it's ...unsecured And, as an unsecured debt, it ranks alongside all the other unsecured trade creditors and non-preferential creditors All clear?
Aacca20503y ago#2
Thanks alot sir! Really appreciate your help. Stay blessed!
MikeLittleMikeLittleTutor3y ago#3
You're very welcome
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