Case Study on Chinaworks Ltd

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Chinaworks Case Qs 1. Outline the order of repayment of the company's debts and the effects (if any) of the charges outlined above. The information provided in the case lists only two lenders for Chinaworks Ltd. the bank that extended a seventy-five-thousand-pound overdraft protection to the company during its initial experience of "temporary cash flow problems," and the second loan company that provided a direct loan of twenty-thousand pounds, Loanshark Ltd. While it is not clear how much Chinaworks Ltd. Actually owes to its bank, the amount is immaterial it might be the entire seventy-five thousand pounds, and it might only be five pounds; who Chinaworks Ltd. Must pay back first when the assets of their company are liquidated is not dependent on the amount or the proportion of the loan owed. Instead, what must be examined are the type of charge placed on the loan and, to some degree, the timing of the loan. The landmark case Re Yorkshire Woolcombers Association is the most directly applicable to this situation, both in implicitly upholding common practice in loan and charge precedent and attachments and in providing specific commentary for the scenario at hand. This case largely defined floating charges, which both of the lenders in this case possess, and delineated the means for disposing of these charges and loans in cases of insolvency, such as Chinaworks Ltd. And its lenders are experiencing. First, it is important to note that fixed charges take precedent over

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