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''See also: [[Assignment by way of security]]''
{{anat|security|}}''See also: [[Assignment by way of security]]''
A fixed charge is a type of [[charge]]. That is fixed. It doesn’t, so to say, ''[[floating charge|float]]''.
A fixed charge is a type of [[charge]]. That is fixed. It doesn’t, so to say, ''[[floating charge|float]]''.
A [[fixed charge]] encumbers asset it secures from day one. To benefit from a fixed charge you need to have control over the assets - if the debtor can deal with the secured assets as it pleases without your knowledge and control, your [[fixed charge]] may fail. On a good day it might get [[recharacterised]] as a floating charge — but don't bank on it and note that there are certain formal requirements to perfect a floating charge which you are likely not to have done, seeing as you were thinking what you had was a fixed charge.
A [[fixed charge]] encumbers asset it secures from day one. To benefit from a fixed charge you need to have control over the assets - if the debtor can deal with the secured assets as it pleases without your knowledge and control, your [[fixed charge]] may fail - see {{casenote1|Re Spectrum Plus}}. On a good day it might get [[recharacterised]] as a [[floating charge]] — but don’t bank<ref>{{hawf}}</ref> on it and note that there are certain formal requirements to [[perfect]] a [[floating charge]] which you are likely not to have done, seeing as you were thinking what you had was a [[fixed charge]] which didn’ require them<ref>Unless it qualified under the [[Financial Collateral Directive]] ({{eudirective|2002|47|EC}}</ref>.
===Why take a fixed charge?===
===Why take a [[fixed charge]]?===
A [[fixed charge]] is better than its poor relation the [[floating charge]]:
A [[fixed charge]] is better than its poor relation the [[floating charge]]:
*practically, because you ''do'' (right?) keep control over the asset and can prevent the debtor salting it away, and
*practically, because you ''do'' (right?) keep control over the asset and can prevent the debtor salting it away, and
*legally, because it ranks ahead of a [[floating charge]] in the debtor’s {{tag|insolvency}} (well - it would do: the first in time prevails, and by definition, a [[floating charge]] only fixes when it crystallises, imeaning a [[floater]] is always last to the party).
*legally, because it ranks ahead of a [[floating charge]] in the debtor’s [[insolvency]] (well - it would do: the first in time prevails, and by definition, a [[floating charge]] only fixes when it crystallises, meaning a [[floater]] is always last to the party). The converse is that the holder of a [[floating charge]] remains subject to the theoretical risk that another creditor will take a fixed charge over the same assets, and this will take priority over the floating charge when it subsequently crystallises.
However, it does require the [[security holder]] to have control of the charged asset. If she doesn’t her fixed charge conceivably fail.
However, it does require the [[security holder]] to have control of the charged asset. If she doesn’t<ref>If, in Ian Curtis’s words, [[she’s lost control]]</ref>, her [[fixed charge]] conceivably fail, in which case it would, most likely, be [[recharacterised]] as a [[floating charge]].
===And “[[control]]” means?===
Well, thereby hangs a tale. Recent case law — especially ''[[obiter dicta]]'' in the [[extended liens]] case, has thrown the area into confusion and now sainted legal counsel are scrambling to caveat views they might in gladder days have issued in bare-knuckle fashion. But even if you have delivered your [[collateral]] to a [[custodian]] and impressed with a fixed [[security interest]] in favour of a creditor, an generalised right to substitute that [[collateral]] might interfere with the [[control]] analysis.
===Fixed charges are good for===
===Fixed charges are good for===
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===Important case law===
===Important case law===
Just because you say you have a fixed charge doesn't mean you do. Practical, factual considerations will apply. There are two important recent cases:
Just because you say you have a fixed charge doesn’t mean you do. Practical, factual considerations will apply. There are two important recent cases:
A fixed charge is a type of charge. That is fixed. It doesn’t, so to say, float.
A fixed charge encumbers asset it secures from day one. To benefit from a fixed charge you need to have control over the assets - if the debtor can deal with the secured assets as it pleases without your knowledge and control, your fixed charge may fail - see Re Spectrum Plus. On a good day it might get recharacterised as a floating charge — but don’t bank[1] on it and note that there are certain formal requirements to perfect a floating charge which you are likely not to have done, seeing as you were thinking what you had was a fixed charge which didn’ require them[2].
practically, because you do (right?) keep control over the asset and can prevent the debtor salting it away, and
legally, because it ranks ahead of a floating charge in the debtor’s insolvency (well - it would do: the first in time prevails, and by definition, a floating charge only fixes when it crystallises, meaning a floater is always last to the party). The converse is that the holder of a floating charge remains subject to the theoretical risk that another creditor will take a fixed charge over the same assets, and this will take priority over the floating charge when it subsequently crystallises.
Well, thereby hangs a tale. Recent case law — especially obiter dicta in the extended liens case, has thrown the area into confusion and now sainted legal counsel are scrambling to caveat views they might in gladder days have issued in bare-knuckle fashion. But even if you have delivered your collateral to a custodian and impressed with a fixed security interest in favour of a creditor, an generalised right to substitute that collateral might interfere with the control analysis.
Fixed charges are good for
Buildings
Plant
immovable forces
Custody assets (where the charge holder is the Custodian)
