Floating Charges

Created by: Redberryb
Created on: 14-04-21 11:10


	Floating Charges
	Advantages FI - Only Company (& LLP) can create a floating charge FI- Can attach to all category of assets, floats over Cs undertakings FI - Crystalisation happens on default of payment or winding up (automatic crystalisation) Fl -Consent is not needed to deal with assets: Re: Spectrum Plus Fl - is equitable charge - not registered Last in pecking order for payment/settlement	Disadvantages Can be disadvantage to lender as borrower can deal with asset so freely. Interest is not specified as constantly changing Only a company can create a Fl charge not an individual Fixed Charged are ranked higher than Fl Not registrable - legal charge takes priority over equitable charge.
	Evaluation FL Charges have 3 characteristics - Yorkshire Woodclimbers Association (Case)********************************************************************************************************************************************1. Charge over a class of assets which can be both on present and future assets i.e Stock and book debts ******************************************************************************************************************************************2. It attaches to an asset which fluctuates during an ordinary course of business i.e Book debts ******************************************************************************************************************************************3. Company can deal with assets unless triggering event for cause crystalisation - defaults or winding up. ***************************************************************************************************************************************************************CHARGES MUST BE REGISTERED AT CHs within 21 days - any debentures, floating charge undertaking on assets or property, charge on goodwill

Floating Charges

Advantages

FI - Only Company (& LLP) can create a floating charge
FI- Can attach to all category of assets, floats over Cs undertakings
FI - Crystalisation happens on default of payment or winding up (automatic crystalisation)
Fl -Consent is not needed to deal with assets: Re: Spectrum Plus
Fl - is equitable charge - not registered
Last in pecking order for payment/settlement

Disadvantages

Can be disadvantage to lender as borrower can deal with asset so freely.
Interest is not specified as constantly changing
Only a company can create a Fl charge not an individual
Fixed Charged are ranked higher than Fl
Not registrable - legal charge takes priority over equitable charge.

Evaluation

FL Charges have 3 characteristics - Yorkshire Woodclimbers Association (Case)**********************************************************************************************************************************************1. Charge over a class of assets which can be both on present and future assets i.e Stock and book debts **********************************************************************************************************************************************2. It attaches to an asset which fluctuates during an ordinary course of business i.e Book debts **********************************************************************************************************************************************3. Company can deal with assets unless triggering event for cause crystalisation - defaults or winding up. *****************************************************************************************************************************************************************CHARGES MUST BE REGISTERED AT CHs within 21 days - any debentures, floating charge undertaking on assets or property, charge on goodwill

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Floating Charges