Discuss what is meant priorities agreement

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Reference no: EM132253167

X establishes an overdraft facility with Bank of Fiji. The debit balance of this account fluctuates as payments are made from the account and payments are made to the account. As security for the overdraft facility X issues Bank of Fiji a mortgage debenture. At a later date X obtains a term loan from Fiji National Bank. As security for the loan, X issues Fiji National Bank a mortgage debenture. Each debenture grants security over all assets present, future and secures “all monies”. Prior to the issue of the second mortgage debenture, Bank of Fiji and Fiji National Bank enter into a “priorities agreement”.

1. Discuss what is meant “priorities agreement” from the above case?

2. Suppose „no’ priorities agreement had been entered into. Will this be advantageous for Bank of Fiji and Fiji National Bank based on the above case?

3. Analyze Carrel v. Hart, [1934] S.C.R. 10 and CFI Trust v. Royal Bank of Canada 2013 BCSC 1715 [Links for the cases are uploaded on Moodle]

(i) Analyze two implications for secured creditors (parties) entering into a priorities agreement with a debtor from each of the above cases. (ii) Examine the two critical lessons learnt by secured creditors from each of the above cases.

Reference no: EM132253167

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