On 2 January 2019, Winful Limited (the "Company") has obtained a loan of HK$ 48 million from the First Bank in Hong Kong. The Company has agreed to provide on all its present and future book debts to the First Bank. (the first charge) The debenture also provided that the Company must not sell or charge the book debts without the consent of the First Bank; and that any money received from the book debts be deposited into a bank account.

On 12 June 2019, the Company broke its promise and created another charge without the consent of the First Bank, it borrowed HK$32 million from the Second Bank and created a second fixed charge over the same book debts in favour of the Second Bank (the second fixed charge).

The Company was compulsorily wound up on 1 March 2020. None of the loans had been repaid. The liquidator has collected all the assets of the Company, including its trading stocks (HK$46 million), cash at hand (HK$ 2 million) and book debts (HK$ 16 million).

Required:

i) Explain whether the first charge is a fixed charge or a floating charge.

(5 marks)

ii) Discuss briefly the effects of non-registration of a registrable charge under the Companies Ordinance.

(4 marks)

iii) Advise the liquidator how the Company's assets should be distributed if both charges were properly registered.

(6 marks)