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{{Cite1|Re Spectrum Plus|2005|UKHL|41}} is an important case about [[fixed charge]]s. | {{Cite1|Re Spectrum Plus|2005|UKHL|41}} is an important case about [[fixed charge]]s. | ||
{{seealso}} | ===Issue=== | ||
Whether a {{tag|charge}} over present and future [[book debts]], where: | |||
*the chargor cannot dispose of or charge the uncollected book debts but | |||
*the charger ''can'' deal with debtors and collect the debts and | |||
*the chargor ''must'' deposit collected debts in a designated account with the charge, ''but'' | |||
*the chargor can then freely draw on the account as long as it doesn't exceed the overdraft | |||
is capable in law of being a {{tag|fixed charge}}. | |||
===The facts=== | |||
*Spectrum had an overdraft with the [[NatWest]]. | |||
*NatWest took a fixed charge over its book debts to secure the overdraft. it required Spectrum to pay the debts into the overdraft account. It did not prevent Spectrum withdrawing them. | |||
*The bank never sought to exercise any control over Spectrum’s withdrawals from the account. | |||
*Spectrum never exceeded its overdraft. Nor did Spectrum ever go into credit. | |||
You can see where this is going, can’t you. | |||
When Spectrum, inevitably, went bust, it owed NatWest £165,407 on the account. Its uncollected book debts had a face value of £291,293, and a likely collection value of £156,544. You know, like roughly. Other unsecured creditors wanted a piece of the action. | |||
So ...? | |||
===Ruling=== | |||
“The correct conclusion, in my opinion, is that the debenture, although expressed to grant the bank a {{tag|fixed charge}} over Spectrum's [[book debts]], in law granted only a {{tag|floating charge}}. | |||
===In other words=== | |||
*[[Beware of magic words]]. | |||
”{{seealso}} | |||
{{casenote1|Re Lehman Brothers International}} | {{casenote1|Re Lehman Brothers International}} |