Fixed V Floating Charges

Question 1

What is a fixed charge?

What are 3 characteristics of a fixed charge?

Answer 1

A legal or equitable charge on a specific asset which prevents the company from dealing with the asset without consent from the mortgagee

On a specific asset
Expected to be permanently retained by the business
Can’t deal freely

Question 2

When does a floating asset attach to a specific asset?
What does crystallisation mean for the asset?
When does crystallisation occur?(3)

Answer 2

Crystallisation
Can no longer be deal freely

Liquidation
Business ceases
Any specific event eg unable to pay bills

Question 3

Priority
Weird priority about registration thing?
What can a charge with priority do?

Answer 3

An unregistered registerable charge has no priority over a registered charge
Can prohibit the creation of a later charge but only if the subsequent chargee aware of the prohibition and the charge

Question 4

Registration
When must a charge be registered?
What are the consequences of failure to do this?
Who can register?

Answer 4

Within 21 days
Renders charge void against liquidator
Fines company and every officer in default
Money secured becomes immediately repayable
Company or charge holder