CHAPTER 3: LOAN CAPITAL

1. PRIORITY OF CHANGES

1.1. GENERAL RULE >secured creditors will have priorits over unsecured creditors >preferential creditors listed in S342 will have priority over unsecured creditors >when equities equal the first time in time prevails * EXCEPTIONS >a charge will losts it priority if its not registered >a subsequent leader will include a clause ; the effect that the subsequent charge will rank in pari passu

2. DEBENTURES

2.1. A piece of document starting that the company is taking plan.

2.1.1. Company borrow money from the bank

2.2. Promise to repay the money borrowed

2.3. Not secured by charge= unsecured debentures

3. CHARGES

3.1. FIXED CHARGE >specified, identifiable >confer interest to changes not ownership >variable assets - debt owning to a company >may force the sale of the property in order to search payment of a debt >takes priority over other creditors

3.2. FLOATING CHARGE >not specific charge >created against all property of the company; present/ future >security granted to a creditor over general assets of a company charge time to time in the normal course of business >can continue to use the assets in its business until an event at default occurs and the charged crystalized >secured creditors can realize the assets to recover his debt by appointing and administrative receiver

4. REGISTRATION

4.1. S352(1) <charge is created; registered within 30 days after the date of creation without prejudice to any contract/ obligation for repayment

4.2. S352(3) >money secured thereby shall immediately become payable(when there is money)

4.3. S361 >court may sanction registration after the inspiration of the 30 days if an acceptable explaination is siren