Avoidance of floating charges, Business Law and Ethics

Assignment Help:

Avoidance of Floating Charges:

Under s.314 liquidation automatically renders void any floating charge created within the period of 12 months before commencement of liquidation subject to the following exceptions:

(a) valid if the company was solvent at the time when the charge was created.  A company is not solvent unless it can pay its debts in full as they fall due;

(b) if the company was not solvent the floating charge is still valid as security for cash paid to the company (with interest at six per cent per annum) after the charge was created and in consideration of the loan.

The general purpose of the rule is to prevent an unsecured creditor of an insolvent company from getting advantage over other creditors by obtaining a floating charge to secure an existing debt at a time when the company is heading towards insolvent liquidation.  It is only the charge (as security) not the debt itself which becomes void.


Related Discussions:- Avoidance of floating charges

Termination of partnership, Termination of Partnership The Articles of P...

Termination of Partnership The Articles of Partnership will contain like a rule or be the regulations with regard for the termination of the partnership. Almost in the absence o

Writ system - equity, Writ System: Further a person intending to comme...

Writ System: Further a person intending to commence an action on common law had to acquire a 'writ' from the government department which was authorized to concern writs.  A wr

Explain economic and social council, Economic and Social Council The Ec...

Economic and Social Council The Economic and Social Council (ECOSOC) is a specialized organ of the United Nations and was established, inter alia, to monitor and regulate human

Choice of name - name clause, Choice of Name - Name Clause: However, i...

Choice of Name - Name Clause: However, it might be relevant to note that the registrar of English companies, pursuant to his powers under the corresponding section of the Engl

International competition law, Select a specific industry or corporation an...

Select a specific industry or corporation and analyse the factors that determine a competitive or anticompetitive outcome;    - Factors such as profit motives interacting with the

State article 2 of international law, State article 2 of International law ...

State article 2 of International law Article 2 states that there is no right of a State under international law to diplomatic relations; these exist by mutual consent. However

Critically examine the exclusivity principle, Question 1: Critically ex...

Question 1: Critically examine the ‘Exclusivity Principle' and support your answer with relevant case law. Question 2: Even before the decision of the Court in Anismini

Employer pay severance allowance to his employee, QUESTION 1 What are t...

QUESTION 1 What are the consequences of a unilateral modification of a contract of employment of indeterminate duration by an employer? QUESTION 2 (a) In what circumsta

All spark-producing devices, Mrs. Rusholme occupied the firm of Saunders an...

Mrs. Rusholme occupied the firm of Saunders and Watts to refinish floors in assured rooms of a home owned by her and her husband in Red Deer, Alberta. She told Mr. Saunders that sh

Division of companys powers, Division of company's Powers: Article 80 ...

Division of company's Powers: Article 80 of Table A states: "The business of the company shall be managed by the directors one who may... exercise all the such powers of th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd