subject : company law topic : company finance ( loan / debenture)

QUESTION 2 (25 MARKS) On 1st December 2021, Sunshine Berhad created a floating charge over its stock in trade favouring Interest Bank to secure a loan of RM100,000. The charge was registered with the Registrar of Companies on 15th December 2021. On 1st January 2022, Sunshine Berhad created a fixed charge over its stock in trade favouring Untung Bank to secure a loan of RM200,000. The charge was registered with the Registrar of Companies on 7th February 2022. Despite the creation of two charges, Sunshine Berhad continued to deal with the stock in trade without any restraint. When Sunshine Berhad defaulted on both loans and call to wind up the company, Interest Bank took steps to sell off Sunshine Berhad's stock in trade. The sale proceeds totaled RM70,000 only. Recently, Interest Bank received a letter from Untung Bank which claimed that as Untung Bank has a fixed charge over the stock in trade, Interest Bank should give the sale proceeds to Untung Bank. As a Company Law expert, explain the differences between the two charges entered by Sunshine Berhad and the rights of Interest Bank and Untung Bank. In the course of your answer, advise about the processes that can take place and the priority of charge entered by them. Support your answers with relevant sections from the Companies Act 2016 and decided cases by the court (if any). (25 marks)