Q&As

If a borrower disposes of an asset subject to a floating charge that has been crystallised, what claims does the lender have?

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Produced in partnership with Peter Susman of Henderson Chambers
Published on LexisPSL on 27/06/2016

The following Banking & Finance Q&A produced in partnership with Peter Susman of Henderson Chambers provides comprehensive and up to date legal information covering:

  • If a borrower disposes of an asset subject to a floating charge that has been crystallised, what claims does the lender have?
  • Crystallisation of a floating charge
  • Claims
  • Claims against anyone who acquired the property after crystallisation of the floating charge
  • Claims against a director
  • Other claims

If a borrower disposes of an asset subject to a floating charge that has been crystallised, what claims does the lender have?

Crystallisation of a floating charge

The nature of a floating charge is that it permits the debtor to make successive disposals (usually only in the usual course of business) of the property secured by the floating charge, for example by making successive sales from the stock of a business where the stock is constantly being replenished and sold on. Following certain Crystallising events, a floating charge will crystallise over the charged assets and become fixed.

For a discussion of what constitutes a crystallising event, see Practice Note: Crystallisation of floating charges. See also the following further reading in LexisLibrary: Crystallisation: Lingard's Bank Security Documents [9.18] and Automatic Crystallisation: Lingard's Bank Security

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