Business organisations Essay Example | Topics and Well Written Essays - 2000 words - 1

Business organisations - Essay Example Imitation Furs Ltd. has applied for insolvency and as such, its assets are subject to liquidation in order to cover the debts secured earlier. Additionally, during the course of liquidation, it is necessary to determine the validity of each creditor and how much each stands to gain from the sale of the company’s assets. This means that a core part of the task aims at segregating creditors on the basis of the secured or unsecured nature of the debt provided to the receiver by them (Philip R. Wood, 2007). In the wake of existence of unsecured creditors, the primary role of the receiver is to be obliged to take utmost care in selling charged assets at a price not less than the market value and in the absence of a reasonable market price to ensure that the sale price is at least reasonable. In the current scenario, both creditors have provided loans to Imitation Furs on the basis of a floating charge. The problem with a floating charge is the constantly changing nature of the underlying asset (the company stock in this case). However, it is theoretically feasible to determine a fixed price that can be agreed over the value of the assets with changing values. Thus, it would be desirable to determine if Imitation Furs had reached any such understanding with either of the creditors in question. It must also be emphasized here to determine and enlist the real assets and properties held by Imitation furs and to arrive at a value of these identified assets. The liquidator needs to be aware of the fact that properties that pass out of the ownership of Imitation Furs are not subject to the floating charge. Conversely, if there is evidence that Imitation Furs had during the course of the loan period, acquired any additional assets, then such acquisitions can automatically be co nsidered within the floating charge (Stephen Judge, 2008). Imitation Furs, with a debt under a floating charge can continue