Query regarding charges

Others 422 views 3 replies

Leena

25 Points Joined December 2013

Dear all

Kindly enlighten me as to following query regarding charges under Company Law:

A Company has taken CC limits from one banker and a term loan from another banker. The CC Limit banker has first charge over all the current assets and immovable properties of the Company while the term loan lender has second charge over immovable properties.

In such situation can CC Limit banker ask for extension of its first charge for all its present and future debts (whether secured or unsecured) provided or that may be provided by the said banker to the Company, having priority over the second charge (while extending second charge in favour of the term loan banker)?

Replies (3)

VINEET JHAWAR

Student CA Final

88 Points Joined December 2013

yes,first charge has the priority over the second charge..
current assets will be first belongs for the CC limit then for TOD limit.
and we have to file e-form 8 for modification of charge within 30 days

Leena

25 Points Joined December 2013

Dear Vineet

Thanks for replying. The query was whether future debts of first charge holder can also be secured in priority of the rights of second charge holder.

Syam Kamal

Company Secretary

66 Points Joined June 2010

As far as my understanding is concerned the following are the facts

Cash credit banker is having the first charge over Current Assets and immovable properties (Present)

Term loan banker is having the second charge over the immovable properties (Not clear abt who holds the first charge).

Question is whether future debts (which is not charged yet) can be charged by way of first charge to CC Banker and by way of second charge to TL Banker

Answer is YES