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Floating Charges and Receivers Overview

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Questions and Answers

What distinguishes a floating charge from a fixed charge under the 1990 Act?

A floating charge remains unchanged regardless of company status.

A floating charge is affected by the appointment of an examiner. (correct)

A floating charge allows direct collection of debts by a receiver.

A floating charge can only be enforced by the company.

Once an examiner is appointed, what happens to the receivers acting on behalf of lenders/creditors?

Receivers can act on behalf of shareholders only.

Receivers can collect book debts directly from clients.

Receivers are no longer able to act on behalf of lenders/creditors. (correct)

Receivers can still act but with limitations on certain assets.

What is unnecessary and impractical for a receiver regarding book debts, according to the document?

Prioritizing debts over company operations.

Collecting debts directly from customers.

Engaging in negotiations with creditors.

Freezing debts in the receiver's books. (correct)

What is a primary objective of the 1990 Act regarding companies?

<p>To allow companies to continue trading. (C)</p> Signup and view all the answers

Which statement accurately reflects the impact of the 1990 Act on company stakeholders?

<p>It prioritizes the rights of shareholders, workforce, and creditors. (B)</p> Signup and view all the answers

Flashcards

Floating charge

A charge that is not fixed to a specific asset; it covers general company assets.

Examiner Appointment

When a company appoints an examiner, receivers' powers change, they can longer collect directly.

Book Debts

Amounts owed to a company for goods or services; often collected by Receivers.

1990 Act Objective

The primary goal of the 1990 Act is the protection of company and continuation of business.

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Continuing Trade

Companies are required (by the Act) to keep trading even after a receiver is appointed.

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Study Notes

Floating Charges and Receivers

Floating charges are created by debentures
Fixed charges are different
Companies' submissions suggest floating charges can revert to floating
Submissions claim it's pointless to freeze debts. They would be collected anyway by the receiver.
The 1990 Act protects companies, workers, and creditors.
Companies continuing business after receiver appointment is not unjust.
Debenture holders appointed receiver. Companies still trade to generate more debt.

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Description

This quiz explores the concepts of floating charges and receivers, particularly in relation to companies and their debenture holders. It discusses the implications of the 1990 Act and the ongoing business operations of companies post-receiver appointment. Test your understanding of these critical elements in corporate finance and law.