Section B - Scenario 5
AeroLogistics Ltd is a freight service firm. They have a loan from BankCorp secured by a floating charge over all the company's assets. AeroLogistics misses three consecutive loan repayments. BankCorp issues a formal demand for payment, which is ignored. BankCorp then formally notifies AeroLogistics that they are enforcing their security.
What is the legal effect of BankCorp enforcing the security on the floating charge?
ACCA · Question 60 · Insolvency law
Section B - Scenario 5
AeroLogistics Ltd is a freight service firm. The administration fails, and AeroLogistics Ltd goes into liquidation. The liquidator realizes £200,000 from selling assets subject to BankCorp's floating charge. However, there are unpaid employee wages of £50,000 and unsecured trade debts of £100,000.
How will the £200,000 be distributed (ignoring liquidation expenses and the prescribed part)?
Answer options:
£200,000 to BankCorp, as they hold a charge over the assets.
£50,000 to the employees (preferential creditors), and £150,000 to BankCorp (floating charge holder).
The funds are distributed equally among all creditors.
£100,000 to trade creditors, £50,000 to employees, and £50,000 to BankCorp.
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