Prentis Ltd ("Prentis") arranged the transportation of goods, mainly vehicles, around the world by using other freight companies. It took advance fees from customers with the promise of passing on funds to shipping firms and customs offices as required.

The boxes and cardboards used for packaging are supplied by Copson Ltd ("Copson") under a contract which provides that the legal and equitable ownership of the goods supplied is retained by Copson until any payments due to Copson have been made in full.

The Vehicles are purchased from Freight plc which has been granted a floating charge over all of Prentis' assets to the sum of 100,000 as security. The charge was not registered with the Registrar of Companies.

Prentis' banker is Pew Bank plc ("the Bank"). In the past, the Bank had always allowed Prentis to run an overdraft without security because the overdraft was personally guaranteed by Prentis' directors. About 6 months ago however the new branch manager requested some additional security and was given a fixed charge to the value of 250,000 over present and future book debts in favour of the Bank.

The debenture requires Prentis to pay the proceeds of the book debt into a bank account jointly controlled by Prentis and the Bank. The debenture also requires Prentis to ask permission from the Bank if it wants to withdraw funds from the book debts account. Prentis has been withdrawing sums from the account. The Bank had knowledge of this matter but chose to ignore.

Prentis went into liquidation. The company's employees had been only paid half their salaries for the past 8 months. Sums were due to Her Majesty's Revenue and Customs.

Advise the liquidator of the validity and priority of interests. (100 marks)