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Questions and Answers
What distinguishes a floating charge from a fixed charge under the 1990 Act?
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?
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?
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?
What is a primary objective of the 1990 Act regarding companies?
Which statement accurately reflects the impact of the 1990 Act on company stakeholders?
Which statement accurately reflects the impact of the 1990 Act on company stakeholders?
Flashcards
Floating charge
Floating charge
A charge that is not fixed to a specific asset; it covers general company assets.
Examiner Appointment
Examiner Appointment
When a company appoints an examiner, receivers' powers change, they can longer collect directly.
Book Debts
Book Debts
Amounts owed to a company for goods or services; often collected by Receivers.
1990 Act Objective
1990 Act Objective
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Continuing Trade
Continuing Trade
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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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