Urgent Query - Holding company and 100% subsidiary company - Students

Urgent Query - Holding company and 100% subsidiary company

Page no : 2

Sahil (CA FINAL) (182 Points)
Replied 18 November 2009

IF HOLDING HAD GIVEN GUARANTEE THEN BANK CAN RECOVER

ELSE NOT

Darshit (CA Final) (964 Points)
Replied 18 November 2009

They cannot recover the said loan from B Ltd as though relationship of Holding and Subsidary exists but the operations are different, yes if it is found that the Loan was defaulted with any acts of Holding Ltd than it can be recovered from holding co rest it cannot do so.

Rakesh Bansal (CA) (75 Points)
Replied 18 November 2009

hiii.... yes loan can be recover from B LTD...... another aspect if loan is secured against ant asset than it can not recoverable from subsi co.

shiv agarwala (chartered accountant) (32 Points)
Replied 18 November 2009

Recovery of the loan amount (other than by way of particular security or personal guarantee of holding co.) can be effected only when the holding co. exercises control over composition of Board of Directors of the subsidiary co..where the management is deemed to be held responsible in such defaults as they carry the power to raise/utilise finances. Where the control is by way of voting power/equity shares with separate mgmt. responsibilities, then the chances are bleak for recovery on the part of the bank.

CA Shammi Prabhakar (Managing Director) (2076 Points)
Replied 18 November 2009

Originally posted by :Sunil... A Mighty Heart
"	Yap, can be recovered from B.Ltd' if amount in full can not be recovered from the estate of A'ltd.	"

Right Answer..

but loan should nt b secured against any specific asset of subsi co.

Sandeep Pandey (CA FINAL) (1306 Points)
Replied 18 November 2009

they can recover from B ltd...............................

(Guest)

Yes they can recover from B,

CA Madhumita Binani (Executive Accounts (SERVICE)) (389 Points)
Replied 19 November 2009

The Bank can recover from B, provided the loan is not secured against any asset

CA Rahul Verma (CA) (546 Points)
Replied 19 November 2009

if the loan is secured on a particular asset (s) then it cannot recover from holding co. If holding co give gurantee then bank recover from holding co.

chetan soni (service) (3784 Points)
Replied 19 November 2009

First bank will try to recover the same from the assets of A Ltd. If they are failed to collect the full amount then Yes, bank can recover the balance loan from B ltd.

Kausha Mehta (CS FINAL STUDENT) (187 Points)
Replied 19 November 2009

Ya I think it can be recovered from holding company

prabhjyot kaur (article assistant) (26 Points)
Replied 19 November 2009

No..

because the identity of both the companies is different..they have seprate legal entity...so loan of one company cannot be recovered from other..

Vinu Santhosh (Pursuing CA PCC) (90 Points)
Replied 19 November 2009

only if they have corporate guarentee, the bank can recover from BLtd(Holding Company)

Originally posted by :CA CS Prakash Somani (A helping Hand)*
"	A Ltd is 100% subsidiary of B Ltd (Holding company). A Ltd taken a bank loan which it is defaulted in repayment. Whether Bank can recover the loan amount from B ltd which is 100% Holding company of A ltd ?	"