- 20 Marks
POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers
Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.
Question
As the Branch Manager of your High Street Branch in Accen, your Securities Clerk asks you the following questions:
a. We submitted any application to the Director/Credit showing the following details of Account X Ltd
- Proposed Limit: GH$500,000,000;
- Proposed Security: Fixed Charge over the factory, minimum forced sale value (FSV) GH$1,500,000,000 on a professional valuation.
The Director/Credit’s office has agreed to lend, but have expressed dissatisfaction with the security and have requested us to take a Debenture under.
Explain the following to your Clerk:
i. What is a Debenture?
ii. Why is the Director/Credit’s’ office requesting for a debenture over the company’s fixed and floating assets?
b. I have read some correspondence about the appointment of an “Administrative Receiver” for Z Limited. Can you explain what “Administrative Receiver” means, how the administrative receiver is appointed and what the administrative receiver does?
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