Law · Banking Law
A company grants an 'Assignment of Book Debts' to Bank A to secure a working capital limit. Simultaneously, it creates a 'Floating Charge' on all current assets (including book debts) in favour of Bank B. Both charges are registered with the Registrar of Companies (ROC). If the company goes into liquidation, which bank has the priority over the receivables?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The government has the first right, and neither bank will receive anything.
- 2Both banks will share the proceeds equally as per the 'Pari-passu' principle.
- 3Bank A, because an assignment is a 'Fixed Charge' and transfers legal title to specific assets.✓
- 4Bank B, because a floating charge covers all assets.
Correct answer
Bank A, because an assignment is a 'Fixed Charge' and transfers legal title to specific assets.
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