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

Discuss the importance of the wto, QUESTION 1 The global business secto...

QUESTION 1 The global business sector has been expanding rapidly in Mauritius. Discuss the role of the FSC in this sector QUESTION 2 Tony is the director of Xservices L

Outline the role played by each of these institutions, QUESTION 1 In Ma...

QUESTION 1 In Mauritius, Industrial Relations are dealt with by a number of specialist institutions. Outline the role played by each of these institutions. QUESTION 2 "

Describe the term- higher national income and interest rate, Describe the t...

Describe the term- higher national income and interest rate This causes country B to adjust to point B with both a higher national income and interest rate. At this point the f

Investigation of companys affairs, Investigation of Company's Membership: ...

Investigation of Company's Membership: Section (1) empowers the registrar to appoint one or   more competent inspectors to investigate and report on the membership of any comp

What do you understand by the rule of law, Question 1: Should the Judic...

Question 1: Should the Judicial Committee of the Privy Council be maintained at the summit of the hierarchy of our judicial system? Critically discuss on the above. Ques

What are the principles of good governance, Question 1: The question of...

Question 1: The question of morality of Public Servants has become a public issue nowadays. What according to you are the factors that have contributed to such a situation?

Why international law is very different from domestic law, Why Internationa...

Why International law is very different from domestic law International law is very different from domestic law because in domestic disputes there are Courts to adjudicate upon

Ddisadvantages - mergers and winding up, Ddisadvantages - mergers and windi...

Ddisadvantages - mergers and winding up: The disadvantages of s.280 are that cash may have to be provided to pay off creditors and dissenting members or alternatively the sale

Third party logistics and distribution facilities, Question 1: Analyze ...

Question 1: Analyze the contribution and role of logistics in the provision of good customer service. Question 2: Discuss the case for and against using in-house or t

Hire-purchase law, Hire-Purchase Law A person who wants to buy goods t...

Hire-Purchase Law A person who wants to buy goods through does not have the like "money consideration" prescribed through the Sale of Goods Act like their price may enter in a

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