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

Criminal-justice system, Models for a criminal-justice system based on an e...

Models for a criminal-justice system based on an ethos of rehabilitation and reintegration ... have been regarded as idealistic but unworkable in the real world, except perhaps in

Agency, John owns a 1951 Mercedes Sl that he wishes to sell. He instructs R...

John owns a 1951 Mercedes Sl that he wishes to sell. He instructs Ross to sell the car, and in return, will be paid £5,000 commission. Ross manages to find a buyer, Paul, Paul and

Law institutions and delegation of authority, Law institutions and delegati...

Law institutions and delegation of authority How time-consistency plays a significant role in policy process. The problems induced by the heterogeneity leading to the problem o

Discuss alternative dispute resolution, QUESTION 1 Nowadays, many peopl...

QUESTION 1 Nowadays, many people are opting for Alternative Dispute Resolution (ADR) as a means to settle commercial disputes due to its advantages. Discuss QUESTION 2

Warranties - terms of a contract, Warranties - Terms of a Contract How...

Warranties - Terms of a Contract However there is no precise legal definition of such "warranty" that in legal nomenclature, where is susceptible for a variety of interpretati

Compensation for loss of office - company management, Compensation for Loss...

Compensation for Loss of Office: (a) Section 192 makes it unlawful for a company to make a director any payment by way of compensation for loss of office, or  may as considera

Discuss the anti-money laundering act 2002, QUESTION 1 Mr. Smith is goi...

QUESTION 1 Mr. Smith is going for his driving test at the Traffic Branch of the police force in Port- Louis. On his arrival, he approaches Police Constable Edouard to facilitat

Reading - categorization of law, READINGS: First Reading In this ...

READINGS: First Reading In this order 101 provides like "every Bill shall be read a First Time without motion made or enquiry put and shall be ordered to be read a second

Leases - voidable contracts, Leases - Voidable Contracts However a lea...

Leases - Voidable Contracts However a lease granted to an infant is binding on him unless he repudiates it then within a reasonable time after attaining the age for eighteen.

Powers, Powers: The ultra vires doctrine limits a company's powers to ...

Powers: The ultra vires doctrine limits a company's powers to the attainment of the company's objects under its  memorandum of association. Partnerships are not  affected by t

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