LAW-CH-14

Which of the following statements about loan capital is/are CORRECT?

(1) All companies have an implied power to borrow funds.

(2) The articles can set limits on the amount a company can borrow.

• 1 only

• 2 only

• Neither 1 nor 2

• Both 1 and 2

Which of the following statements about charges is/are CORRECT?

(1) A fixed charge attaches to a specific, identifiable asset

(2) A floating charge attaches to a specific, identifiable set of assets

• 1 only

• 2 only

• Neither 1 nor 2

• Both 1 and 2

Rio Ltd has borrowed £1 million from V Bank secured with a fixed charge over its property. Rio Ltd has also borrowed £2 million from Z Bank, secured with a floating charge over its inventory.

Which of the following statements about creditors’ claims is CORRECT?

• Preferential creditors hold priority over V Bank and Z Bank

• Z Bank holds priority over V Bank

• V Bank holds priority over Z Bank

• None

What name is given to a party appointed by holders of a fixed or floating charge to realise the charged assets with a view to repaying the charge holder?

• Administrator

• Receiver

• Liquidator

• None

What name is given to an insolvency practitioner appointed by the company or by the court to wind up the company?

• Administrator

• Receiver

• Liquidator

• None

Which of the following statements about company charges is correct?

• A floating charge has priority over a fixed charge

• Preferential creditors take priority over fixed charge-holders

• A fixed charge has priority over a floating charge

• None

Two fixed charges have been registered over the same property.

What is the position with regard to the competing claims of the charge-holders?

• The first charge in time has priority

• The two charges rank equally

• The two charges rank equally unless the second charge-holder knew of the first charge

• None

Which of the following statements about a floating charge is correct?

• It is a charge over a class of company assets which the company is unable to deal with freely in the ordinary course of business

• It must be registered with the Registrar of Companies within 21 days of its creation otherwise the charge is void against the other creditors

• It must be registered at the company’s registered office in the register of charges, but a failure to do so does not affect the validity of the charge

Under the Companies Act 2006 a floating charge is void against the liquidator and any creditor of the company unless particulars of it are registered with the Registrar of Companies.

Within how many days of its creation must a charge be registered?

• 14 days

• 15 days

• 21 days

• 25 days

Triple X plc has entered into fixed charged contracts and has also entered into floating charge contracts.

Which of the following is correct?

• All charges must be registered with the Registrar of Companies

• Only the fixed charges are required to be registered with the Registrar of Companies

• The statutory duty to register the charges lies with the charge-holder

• If the charges are not duly registered they become unenforceable in an insolvent winding-up