Floating charges

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Floating charges
  • What is a floating charge?
  • Floating charges
  • Comparison with fixed charges
  • Reasons for taking a floating charge
  • Flexibility for security provider
  • Charge assets not subject to fixed charge
  • Qualifying floating charge
  • Who can grant a floating charge?
  • How to take a floating charge—drafting and documentation points
  • More...

Floating charges

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for lending lawyers? [Archived]

A floating charge is most commonly contained in a debenture along with other forms of security such as fixed charges, assignments and legal mortgages. Inclusion of a floating charge provides important advantages for secured lenders (see Reasons for taking a floating charge below).

This Practice Note discusses:

  1. the nature of a floating charge

  2. the reasons for and advantages of taking a floating charge

  3. who can grant a floating charge

  4. how to take a floating charge, and

  5. perfection, priority and enforcement considerations

What is a floating charge?

Floating charges

In Re Yorkshire Woolcombers Romer LJ set out the classic criteria of a floating charge:

  1. it is a charge on a class of assets of a company present and future

  2. the class of assets is one which, in the ordinary course of the company business, will change from time to time, and

  3. it is

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