When a company defaults on interest payments for a debenture,the floating charge is said to ______ a fixed charge.
A) transform into
B) crystallise into
C) originate as
D) adjust to

Question

Quizplus · Accepted Answer

When a company defaults on interest payments for a debenture, the floating charge is said to crystallise into a fixed charge. This means that the charge that was previously floating (i.e. attaching to assets as they fluctuate in value) now becomes fixed to specific assets of the company. This is a significant change because a fixed charge takes priority over a floating charge in terms of repayment in the event of insolvency.

When a Company Defaults on Interest Payments for a Debenture,the