When the capital of the company is not sufficient to meet the needs of business of the company, it can raise loan by the issue of what is known as debenture. So, debenture represents the loan of the company. Debentures are usually issued in bonds by a company and are offered by means of prospectus.
It also be offered for sale in the open market. The amount borrowed from the sale of debentures is refundable with interest over a period of time.
Discuss about the remedies available to a debenture holder when his/her debentures are in jeopardy
If the company fails to pay interest or principal on the due date or fails to comply with any of the terms and conditions under which the debenture was issued, the debenture holder can adopt any of the following remedial measures:
1. He may file a suit for the recovery of money by sale of the assets.
2. He may file an application for the appointment of a receiver by the court.
3. He may himself appoint a receiver if the terms of the debenture entitled him
to do so.
4. The trustees may sell the properties charged, if such a Power is given to them under the terms of the debenture.
5. He may apply to the court for the foreclosure of the company's right to
redeem the properties charged for the Payment of the money.
6. He may present Petition for the winding up of the company.