8h Priority, Registration and Validity of Charges

Question 1

Which charge has a higher priority, fixed or floating?

Answer 1

• Generally a fixed charge takes priority of a floating charge.

Question 2

When would a floating charge take priority over a fixed charge?

Answer 2

After a crystallising event, the floating charge becomes a fixed charge as of that date. This charge will then take over priority of any fixed charges post crystallising event.

Question 3

What takes priority when considering equal charges over the same asset?

Answer 3

The earlier of the equal charges takes priority.

Question 4

When would a charge be treated as an unsecured loan?

Answer 4

If a charge isn’t registered, it is treated as an unsecured loan as a charge must be registered to be valid.

Question 5

When can a liquidator avoid a floating charge?

Answer 5

• If it was created within 12 (24 if the company and creditor are connected) months of winding up.
• If at the time the charge was created, the company was unable to pay its debts.

Question 6

When must a company notify the Registrar of the charges creation?

Answer 6

Within 21 days

Question 7

When is a charge valid from?

Answer 7

Date of creation.

Question 8

Who can undertake the registration of a charge?

Answer 8

Company or charge holder.

Question 9

What happens if you fail to register a charge?

Answer 9

• Renders charge void against the liquidator.
• Results in a fine on the company and every officer in default.
• Renders the money secured immediately repayable.