company Law

CA Manmohan (Querist) 03 January 2011 This query is : Resolved
XYZ Co. Limited. borrowed a sum of Rs.20 Lakh from a bank on the mortgage of entire assets of the companyand on execution of personal guarantee by all itd directors, who stood as surities for the loan. after one year, the company went into liquidation. for paying off bank loan, on passing a board resolution, the directors advanced money to the company to discharged the liability toward the bank loan. however no action for satisfaction of charge against the property of the company with the ROC was taken. directors claimed that they were subrogated to the position of mortganee bank on paying off the debt and thus wanted to claim money in priority to others. PLEASE DECIDE WITH CASE LAW IF ANY.

Follow Query

Report Abuse

s.subramanian (Expert) 04 January 2011
No. They cannot claim any such priority of charge. What they have advanced would be treated as merely unsecured debts of the company.

Guest (Expert) 04 January 2011
(1) Bank's Settlement Letter may be sent to the ROC evidencing the discharge of the company's liability towards the bank by means of a letter sent by RPAD. Despite the intimation letter, the satisfaction of Charge is not recorded, then a direction from the Company Court to ROC may be obtained to that effect.
(2) You have not told us whether the company's assets are handed over to the directors on their re-payment to the bank. If the assets are handed over by the bank to the directors in subrogation, then they become Secured Creditors and would enjoy the preference over other creditors, otherwise they rank "pari passu" with other creditors.

Previous

Next

You need to be the querist or approved LAWyersclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

Ask Query
Unanswered Queries