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Did the grant of a floating charge result in the crystallisation of an earlier floating charge pursuant to the terms of a negative pledge? What is the impact on appointment of administrators appointed under the floating charge? Natalie Brown, barrister at Radcliffe Chambers, offers practical advice to lenders and administrators within the context of Property Edge Lettings Ltd’s application.
Re Property Edge Lettings Ltd Saw (SW) 2010 Ltd and another v Wilson and others  EWHC 4069 (Ch),  All ER (D) 118 (Mar)
The Chancery Division dismissed an application seeking a declaration that the Nationwide did not hold an enforceable and/or qualifying floating charge over the property of Property Edge Lettings Limited (PEL) for the purposes of paragraph 14 of Schedule B1 to the Insolvency Act 1986 (IA 1986) so it had no power to appoint the three respondents as joint administrators to PEL.
In 2007, Capital Home Loans Limited granted PEL a loan secured by way of six separate fixed charges on a residential properties owned by PEL (the CHL charges). Each deed of charge granted a legal mortgage over the properties and also charged:
‘By way of a floating charge the undertaking and all other property assets and rights of [PEL] not effectively charged above, both present and future.’
The CHL charges were registered at Companies House under PEL’s name and the particulars of mortgage or charge, in Companies Form Number 395, expressly stated the existence of the fixed charge and also the floating charge.
One of the provisions incorporated into the CHL charges from the Capital Home Loans Mortgage Conditions 2004 was:
‘If, without the prior written consent of the lender, the borrower encumbers howsoever the property subject to the floating charge or if any person levies or attempts to levy any distress, sequestration or other process against
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