Chapter 13 - Loan Capital

Question 1

What are the main sources of loan capital?

Answer 1

Bank loans, debentures, bonds and other forms of debt financing.

Question 2

What is a debenture?

Answer 2

A document that acknowledges a company’s debt and sets out the terms of repayment.

Question 3

What is the difference between fixed and floating charges?

Answer 3

A fixed charge attaches to specific assets; a floating charge hovers over a class of assets and crystalizes upon default or insolvency.

Question 4

What is the role of a receiver?

Answer 4

A receiver is appointed to take control of charged assets to repay secured creditors.

Question 5

What are the registration requirements for charges?

Answer 5

Most charges must be registered at Companies House within 21 days of creation (CA 2006 s.859A).

Question 6

Quick Hit
Loan Capital

Answer 6

Money borrowed by a company to finance operations.

Question 7

Quick Hit
Debenture

Answer 7

A written acknowledgment of debt.

Question 8

Quick Hit
Fixed Charge

Answer 8

Security over specific assets.

Question 9

Quick Hit
Floating Charge

Answer 9

Security over a class of changing assets.

Question 10

Quick Hit
Receiver

Answer 10

Person appointed to enforce security.