Assignment 3, CLO 2: Case on L. Charge, Guarantee, Pledge and Debenture Dated: 24 June2020

Required:

1. Go to UUM MOOC on Chapter 5: Legal Charge. Do the Assignment 3 on Group basis.
2. Read this case and answer all the questions.
3. Upload your group answer to OpenLearning, under UUM MOOC by 29 June 2020.

In 2012, Maybank has granted the following facilities to Sendaria Bhd:

Facility	Amount	Secured against
Overdraft Fixed loan	RM10m RM6m	1) Legal Charge on companys land under HS(D) 2010. The land worth RM8m. 2) Joint Guarantee for RM10m by all the five (5) companys directors. 3) Pledge over the companys Fixed Deposit Receipt of RM2m with Maybank. 4) Specific Floating-Charged Debenture on the companys assets valued at RM16m.

By March 2013, Sendaria Bhd has defaulted with outstanding balance of RM8m. Maybank immediately liquidated the Fixed Deposit of RM2m and used the proceeds to reduce the loan. The outstanding loan balance was then reduced to RM6m.

By April 2014, Maybank obtained a court order to sell the land under HS(D) 3456 by public auction. The estimated market value of the land was RM10m. At the same time Maybank sued the guarantors for RM6m and proceeded to obtain court order to declare them bankrupts unless the guarantors settle the loan by December 2004.

By July 2014, Maybank discovered that Sendaria Bhd had, in January 2011, created a general floating-charged debenture for RM3m on all floating assets to secure a debenture loan with Affin Bank. Sendirian Bhd. had lodged Form 34 on that debenture with Companies Corporation of Malaysia. This debenture loan has a current outstanding balance of RM1.5m. Affin Bank is now demanding the RM2m Fixed Deposit from Maybank. Also, by now it is clear that Sendaria Bhd is owing Maybank RM6m and Affin Bank RM1.5m.

Based on the above information answer the following questions:-

A. What do you think of Maybanks action to sue the guarantors and to make them bankrupts? Justify your opinion with facts, point of law, etc.

(7 marks)

B. Should Maybank oblige and surrender the Fixed Deposit (FDR) of RM2 million to Affin Bank? Justify your answer.

(6 marks)

C. Assuming that, after enforcing all rights under legal charge and debentures, Sendaria Bhd is still owing Maybank RM2m. One guarantor has passed away leaving an estate worth RM400,000. How much can Maybank recover from the guarantors and the estate of the deceased guarantor? Explain your answer.

(4 marks)