Floating Charge

Floating Charge definition

/ˈfləʊtɪŋ/ /tʃɑːdʒ/

What does Floating Charge mean?

A charge over all the assets or a class of assets owned by the security provider, including future assets. Before crystallisation of the charge, the security provider can deal with the assets in the ordinary course of business.

Floating Charge explained

On crystallisation, the charge converts to a fixed charge and attaches to all the assets in the charged class currently owned by the security provider (or acquired afterwards), and its authority to deal with those assets terminates. One of the main advantages of a floating charge is that, following default, the charge holder can appoint administrators, or in certain circumstances, administrative receivers.

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