top of page
Review Your SQE 1 Practice Records

Examination Timing: 00H01M25S

Thompson Ltd created a floating charge over all its assets in favour of a trade supplier, as security for sums due from time to time. Five years later, the same company entered into a debenture with a bank, creating a floating charge over all its assets as security for a loan from the bank. The trade supplier’s charge was not registered at Companies House.


However, before the debenture was signed, Thompson Ltd notified the bank that the trade supplier already held a valid floating charge over the company’s assets. The debenture was duly executed and was immediately registered at Companies House. The company went into administration ten months after entering into the debenture, with outstanding sums due and unpaid both to the trade supplier and to the bank. 


Which creditor of the company has a prior claim to the company’s assets?

< Previous

You have chosen the incorrect answer.

Next >

The bank has a prior claim to the company’s assets because the trade supplier’s failure to register its floating charge makes it void against the administrator and the bank. Under the Companies Act 2006, a floating charge must be registered at Companies House within 21 days of its creation to be valid against other creditors. Since the trade supplier did not register their charge, it is void in this context. 


Key Point: Registration of floating charges is crucial for maintaining their validity against other creditors. Failure to register within the stipulated period renders the charge void against the company’s administrator and other secured creditors.

Collect Question

userContent

Study CELE SQE.png
CELE SQE PASS wishes from Lucky Lion_

Ai Content

bottom of page