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

Recovery of possession of goods, Recovery of Possession of Goods Howev...

Recovery of Possession of Goods However below S.15 where two-thirds or more about the hire-purchase price has been paid the owner is such precluded from enforcing the rights a

What is the aim of the reviewing authority, QUESTION 1 Outline the hist...

QUESTION 1 Outline the history of Labour Laws in Mauritius QUESTION 2 a) In what circumstances can an employer raise the defence of abandonment of work? b) Section 1

Rule in foss v harbottle, RULE IN FOSS v HARBOTTLE:  What has come to ...

RULE IN FOSS v HARBOTTLE:  What has come to be recognized in company law as "the rule in Foss v Harbottle" is the decision of Vice-Chancellor Wigram in the case of Foss v Harb

What has been the evolution of the concept of corporate, QUESTION 1 The...

QUESTION 1 The doctrine laid down in Salomon v Salomon & Co. Ltd has to be watched very carefully. The Courts can and often do draw aside the veil. Discuss QUESTION 2 (

Describe in detail about the european monetary union, Describe in detail ab...

Describe in detail about the European Monetary Union The experimental lab for international policy coordination has been the European Union where monetary unification of member

State the policies of convergence, State the policies of convergence Ex...

State the policies of convergence Explained here in the simplest case with assumption that there is full representation of voters; information is symmetric and single peaked pr

Fraud on the minority, Fraud on the minority: The exception of "fraud ...

Fraud on the minority: The exception of "fraud on the minority" depends, whereas the company is defrauded, on "wrongdoer control," i.e. the individual shareholder must show th

What are the possible causes of employee grievances, QUESTION 1 What ar...

QUESTION 1 What are the role, powers, functions, aims and objectives of Trade Unions in maintaining a sound and harmonious relations? QUESTION 2 (a) What are the possib

State the world rate of interest, State the world rate of interest We ...

State the world rate of interest We have assumed that the world rate of interest only falls to equal R 2 . At point B, therefore, the domestic rate of interest is below the wo

Counselling psychology , Hypothetical case example: Allison is an 18 ye...

Hypothetical case example: Allison is an 18 year old female student is the first year of an undergraduate university degree. She shares a double room in the university dorm wit

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