243Topic list Syllabus reference
1 Borrowing E2(a)
2 Debentures and loan capital E2(b), E2(c)
3 Charges E2(d)
4 Registration of charges E2(e)
5 Debentureholders' remedies E2(b), E2(c)
e
Loan capital
Introduction
In this chapter on borrowing and loan capital, you should note that the
interests and position of a lender is very different from that of a shareholder.
We shall be looking at how loan capital holders protect themselves, specifically
through taking out fixed or floating charges over company assets. Charges
give the lender the right to sell assets which are subject to the charge in order
to recover money owed to them if the borrower does not repay the debt.
You need to understand the differences between fixed and floating charges, and
also how they can protect loan creditors, for example by giving chargeholders
the ability to appoint a receiver.