Q&As

Can you give upfront consent or set certain criteria in advance for the release of assets from a fixed charge without compromising that fixed charge?

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Published on LexisPSL on 11/06/2018

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

  • Can you give upfront consent or set certain criteria in advance for the release of assets from a fixed charge without compromising that fixed charge?

Can you give upfront consent or set certain criteria in advance for the release of assets from a fixed charge without compromising that fixed charge?

The key characteristic of a fixed charge is that the security holder exercises a certain level of control over the charged asset preventing the security provider from doing anything to take the asset outside of the scope of the security. The issue here is whether the security holder, by giving an advance consent to release, even subject to criteria, forgoes control and allows the security provider to remove the asset from the ambit of the security in a way that turns the fixed into a floating security interest.

What level of control is necessary? The practical difficulty in giving definitive advice on this issue is that in the leading case on re-characterisation of a fixed charge; National Westminster Bank plc v Spectrum Plus

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