Q&As

Can a crystallised floating charge be de-crystallised?

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Published on LexisPSL on 12/05/2016

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • Can a crystallised floating charge be de-crystallised?
  • Crystallisation of floating charges
  • Why might de-crystallisation be desirable?
  • Is de-crystallisation possible?

Crystallisation of floating charges

A floating charge may Crystallize by operation of law or it may Crystallize in accordance with a contract. Crystallisation by contract can by divided into those events that entitle the lender to give notice of crystallisation and those that result in the floating charge being crystallised automatically.

For more information on how floating charges may crystallise, see Practice Note: Crystallization of floating charges.

Most debentures will clearly set out which events will trigger crystallisation by notice and which will trigger the automatic crystallisation provisions. For more information, see Crystallisation of floating charges — Crystallisation by contract.

Why might de-crystallisation be desirable?

Once a floating charge has crystallised, the key impact is that the chargor can no longer deal with the floating charge assets without the chargee's consent. In practice this will make it difficult for the chargor to run its business. From the chargee's perspective, this protects the assets from execution creditors and can have advantages in terms of the priority of the charge. For further information about the effect of crystallisation, see Crystallisation of floating charges — The effect of crystallisation.

There may, however, be times where

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