Question

1. (b) Wheels Limited issued a debenture to East Bank Ltd. four years ago. The debenture was in the bank’s standard form described as a fixed and floating charge over all the assets of the company. However, due to inadvertence, the charge was neither dated nor registered within time. The company is now in liquidation and the loan is in arrears. The bank seeks your legal advice as to whether it can rely on the charge to prove its claim in the winding up proceedings of the company. Advise East Bank Ltd. on the implications of non registration of the charge. .

Answer 1

In my opinion, the bank cannot rely on the charge to prove its claim in the winding up proceedings of the company because the charge was neither dated nor registered within time. Due to non registration of charge within time, the bank does not have any underline security against the loans issued by the bank to Wheels Limited. Hence the bank has no claim in the winding up proceedings of the company. The implications of non registration of the charge for East Bank Ltd. are that the bank cannot claim any security against the loan issued to Wheels Limited and it cannot claim any refund against the default made by the company and arrears in the loan as the charge is not registered within time.