Floating Charge .

December 30, 2020 By Swapnil Suryawanshi

Floating charge is a security interest over a fund of changing assets (e.g. stocks) of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, In most countries floating charges can only be granted by companies, LLPs or similar entities with separate legal personality. If an individual person or a partnership was to try to grant a floating charge, then in most jurisdictions which recognise floating charges this would be void as a general assignment in bankruptcy.

Quebec :

When the Quebec Civil Code came into force in 1994 and superseded the Civil Code of Lower Canada, it abolished the charge flottante “floating charge” and created and introduced an analogous security device into Quebec law under the name hypothèque ouverte, or “floating mortgage“. As a mortgage, it

Differences between Fixed charges and Floating charges - Lawnotes4u

History :

The floating charge has been described as “one of equity’s most brilliant creations.”

The first recorded English case where a floating charge was recognised was In re Panama, New Zealand, and Australian Royal Mail Co (1870) 5 Ch App 318. The use of such floating charges increased in popularity and expanded rapidly until, as Lord Walker described it: “The floating charge had become a cuckoo in the nest of corporate insolvency.” Criticism of the effect of floating charges grew, until Lord Macnaghten finally proclaimed in Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22.

The floating charge has been described as “one of equity’s most brilliant creations.”

Strenghts and Weaknesses of fixed and floating charges as forms of se…

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