Podcast
Questions and Answers
What happens to a floating charge upon the appointment of an examiner according to Mr. Justice Blayney?
What happens to a floating charge upon the appointment of an examiner according to Mr. Justice Blayney?
- It becomes a fixed charge immediately.
- It remains crystallised indefinitely.
- It resumes its character as a floating charge. (correct)
- It is entirely voided.
Why did Blayney J. argue it would be pointless to keep book debts frozen after the examiner's appointment?
Why did Blayney J. argue it would be pointless to keep book debts frozen after the examiner's appointment?
- The book debts were irrelevant to the company’s operation.
- The receiver would have no authority to collect them. (correct)
- The law prohibited any financial operations.
- The company would go bankrupt the next day.
What purpose does Mr. Justice Blayney associate with the 1990 Act?
What purpose does Mr. Justice Blayney associate with the 1990 Act?
- To restrict companies from trading.
- To facilitate the liquidation procedures.
- To protect the company and its stakeholders. (correct)
- To increase corporate taxation.
How did Mr. Justice Blayney view the situation regarding the rights of debenture holders post-examiner appointment?
How did Mr. Justice Blayney view the situation regarding the rights of debenture holders post-examiner appointment?
What does section 5(2)(d) of the 1990 Act state regarding claims secured by a charge?
What does section 5(2)(d) of the 1990 Act state regarding claims secured by a charge?
What conclusion did Blayney J. reach regarding the nature of the charge on book debts after the examiner's appointment?
What conclusion did Blayney J. reach regarding the nature of the charge on book debts after the examiner's appointment?
What did Blayney J. suggest would be a breach by the receiver if they insisted that the charge remain crystallised?
What did Blayney J. suggest would be a breach by the receiver if they insisted that the charge remain crystallised?
In the judgment, what would be the implication for the company if it were deprived of the use of its book debts?
In the judgment, what would be the implication for the company if it were deprived of the use of its book debts?
What does the appointment of the examiner signify for the receiver's authority to act?
What does the appointment of the examiner signify for the receiver's authority to act?
According to Mr. Justice Blayney, why is it inconsistent to keep book debts frozen upon the appointment of the examiner?
According to Mr. Justice Blayney, why is it inconsistent to keep book debts frozen upon the appointment of the examiner?
What is the core purpose of the 1990 Act as highlighted by the Chief Justice in his judgment?
What is the core purpose of the 1990 Act as highlighted by the Chief Justice in his judgment?
What rationale does Blayney J. provide regarding the no injustice to debenture holders after the examiner's appointment?
What rationale does Blayney J. provide regarding the no injustice to debenture holders after the examiner's appointment?
What consequence does Blayney J. suggest would occur if the receiver insisted on the charge on book debts remaining crystallised?
What consequence does Blayney J. suggest would occur if the receiver insisted on the charge on book debts remaining crystallised?
What happens to the charge on book debts immediately after the appointment of the examiner according to Blayney J.?
What happens to the charge on book debts immediately after the appointment of the examiner according to Blayney J.?
Why would maintaining the frozen status of book debts be seen as pointless after the examiner's appointment?
Why would maintaining the frozen status of book debts be seen as pointless after the examiner's appointment?
What underlying principle does Blayney J. emphasize when discussing the protection of company assets under the 1990 Act?
What underlying principle does Blayney J. emphasize when discussing the protection of company assets under the 1990 Act?
Flashcards
De-crystallization of a Floating Charge
De-crystallization of a Floating Charge
The process where a floating charge, which has become fixed (crystallized) due to a specific event, reverts to its original floating status. This change occurs due to certain actions or circumstances.
Floating Charge
Floating Charge
A security interest in a company's assets that are used in the ordinary course of business, such as inventory. It doesn't freeze these assets but applies to the general business operation, so it can shift.
Crystallization of a Floating Charge
Crystallization of a Floating Charge
The point where a floating charge becomes a fixed charge, meaning specific assets are now secured by the charge. Usually, this happens when a specific event has been triggered.
Receiver's Role in Holidair Case
Receiver's Role in Holidair Case
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Purpose of 1990 Act (Holidair Case)
Purpose of 1990 Act (Holidair Case)
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Justification for De-crystallization in Holidair
Justification for De-crystallization in Holidair
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Section 5(2)(d) of 1990 Act
Section 5(2)(d) of 1990 Act
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Book Debts
Book Debts
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De-crystallization
De-crystallization
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Effect of Examiner Appointment (Holidair)
Effect of Examiner Appointment (Holidair)
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Purpose of 1990 Act (Holidair)
Purpose of 1990 Act (Holidair)
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Study Notes
De-crystallization of Floating Charges
- A floating charge, which is not fixed, crystallises on the appointment of a receiver.
- However, the charge can become de-crystallised, reverting to a floating charge, on appointment of an examiner.
- This was established in the Re Holidair case.
- A critical aspect in this is that on appointment of the examiner the receiver can no longer act.
- Keeping the book debts frozen would be pointless.
- Purpose of 1990 Act is the protection of the company and consequently shareholders, the workforce, and creditors.
- It is wholly inconsistent to deprive the company of its book debts, especially if the company relies on these to survive during protection.
- There's no injustice to debenture holders who appointed the receiver because the companies continue to trade and generate new book debts to replace those repaid.
- The receiver would be in breach of the 1990 Act if they insisted on the charge remaining crystallised.
- A claim against a company secured by a charge on its property requiring the examiner's consent.
- Therefore, on the appointment of the examiner, the charge on book debts ceases to be crystallised and becomes a floating charge.
- Appeal successful against court's decision regarding the nature of the charge on book debts.
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