floating charge

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Related to floating charges: fixed charges

floating charge

a security created by a company by debenture (in Scotland, a floating charge) over its whole assets and undertaking for the time being. The point of this form of security is that the company may continue to conduct its business, disposing of some assets and acquiring others without having to obtain the consent of the debenture holders for each disposal. In the event of a default, the charge crystallizes and becomes fixed and enforceable over the assets held at that time.

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English fixed and floating charges are created, perfected, prioritized, and enforced in essentially the same manner as American security interests.

Optimizing English and American security interests

statutory amounts payable to employees) rank in priority to any charge created as a floating charge.

Securitization in emerging markets, including government promotion of securitization

below, floating charges are subordinate to administrative expenses, preferential creditors, and an unsecured creditors' prescribed share, but fixed charges are senior to all creditors except prior fixed charges.

Optimizing English and American security interests

insolvency law, which allows holders of floating charges on substantially the entire property of a borrower to appoint an administrative receiver, who effectively will be able to restrain the jurisdiction of the bankruptcy court over such assets.

Whole business securitization: secured lending repackaged?

This, together with the proposal to ring-fence a proportion of funds from floating charges, will benefit the ordinary trade creditor but to what extent remains to be seen.