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Examine the following issues: a) The difference between a fixed charge and a floating charge. b) The consequences of a failure to register a charge. c) The priority of charges. d) The difference if the charges were created one month before liquidation e) The definition and effect of the negative pledge clause in this case

Examine the following issues: a) The difference between a fixed charge and a floating charge. b) The consequences of a failure to register a charge. c) The priority of charges. d) The difference if the charges were created one month before liquidation e) The definition and effect of the negative pledge clause in this case

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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RRR Sdn. Bhd. borrowed RM2 million from AAA Bank in November 2019. This was secured by a fixed charge on the company's land in Sentul. However, this charge was not registered according to the Companies Act 2016. In November 2020, RRR Sdn. Bhd. borrowed a further RM500,000 from FFF Bank. This was secured by a floating charge on the company's book debts. This charge was duly registered. An order to wind up RRR Sdn. Bhd. was made by the High Court on December 2021 on the application by EEE bank, a creditor, who granted the company a loan on the security of a floating charge on all the assets and undertakings of the company in November 2021. This charge was also registered accordingly, and a negative pledge clause was attached. A liquidator has been appointed. Examine the following issues: a) The difference between a fixed charge and a floating charge. b) The consequences of a failure to register a charge. c) The priority of charges. d) The difference if the charges were created one month before liquidation e) The definition and effect of the negative pledge clause in this case
Transcribed Image Text:RRR Sdn. Bhd. borrowed RM2 million from AAA Bank in November 2019. This was secured by a fixed charge on the company's land in Sentul. However, this charge was not registered according to the Companies Act 2016. In November 2020, RRR Sdn. Bhd. borrowed a further RM500,000 from FFF Bank. This was secured by a floating charge on the company's book debts. This charge was duly registered. An order to wind up RRR Sdn. Bhd. was made by the High Court on December 2021 on the application by EEE bank, a creditor, who granted the company a loan on the security of a floating charge on all the assets and undertakings of the company in November 2021. This charge was also registered accordingly, and a negative pledge clause was attached. A liquidator has been appointed. Examine the following issues: a) The difference between a fixed charge and a floating charge. b) The consequences of a failure to register a charge. c) The priority of charges. d) The difference if the charges were created one month before liquidation e) The definition and effect of the negative pledge clause in this case
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