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Business Environment and Law-Debentures

Remedies Of Debenture Holders

   Posted On :  14.05.2018 09:29 pm

A company like any other person can, when it borrows money, give its creditors security. Often it mortgages or charges its property to its debenture-holders.

Remedies Of Debenture Holders

1. He may sue for his principal and interest.
2. He may, petition under Sec. 439 for the winding up of the company by the Court. But in addition he has also the following courses open to him:
a. Debenture-holders’ action.
b. Appointment of receiver.
c. Foreclosure.
d. Sale.
e. Proof for the balance.

Creation Of Charges:

 
A company like any other person can, when it borrows money, give its creditors security. Often it mortgages or charges its property to its debenture-holders.
 

Fixed And Floating Charges:

 
 

Fixed charge:

 
A fixed or specific charge is one which is created on some specific and definite assets of the company, e.g., a charge on land and building.
 

Floating charge:

 
A floating charge is an equitable charge which is created on some class of property which is constantly changing, e.g., a charge on stock-in-trade, trade debtors, etc.
 

New financial instruments:

 
Issuer of capital shall make instruments such as Deep Discount Bonds, Debentures with Warrants, Secured Premium Notes etc., so that an investor can make reasonable determination of the risks, returns, safety and liquidity of the instruments.

 

Tags : Business Environment and Law-Debentures
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