Question

Justify the following statement.

The debentures are secured by a charge on assets of the company

Answer 1

Justification:

1. Secured debentures are the debentures which are secured by some charge on the assets or property of the company.
2. The charge may be either a fixed charge or a floating charge.
3. In case of a fixed charge, specific assets are mortgaged as security for the debentures.
4. Under floating charges, the debenture holders have a claim overall assets of the company.

Thus, it is rightly justified that, debentures are secured by a charge on assets of the company.