Q&As

If there is a fixed charge over agricultural equipment but the instrument contains wording to the effect that the schedule may be amended from time to time, then upon an amendment is there a new charge created or does the original charge continue or may the charge actually be a floating charge?

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Published on LexisPSL on 10/02/2016

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

  • If there is a fixed charge over agricultural equipment but the instrument contains wording to the effect that the schedule may be amended from time to time, then upon an amendment is there a new charge created or does the original charge continue or may the charge actually be a floating charge?

If there is a fixed charge over agricultural equipment but the instrument contains wording to the effect that the schedule may be amended from time to time, then upon an amendment is there a new charge created or does the original charge continue or may the charge actually be a floating charge?

Depending on the type of amendment being made, amending a charge carries several risks. In particular, a liquidator or administrator could argue that new security has been created, which may result in the security being set aside. As a result, it is often seen as safer to put a new security document in place and leave the existing security un-amended. In addition, as you have rightly indicated, changing the terms of a fixed charge could risk it being re-characterised as a floating charge. Please see our Practice Note: Fixed and floating charges for more information.

In the event an existing charge is extended to new or replacement

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