82,927
edits
Fixed charge: Difference between revisions
Jump to navigation
Jump to search
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 6: | Line 6: | ||
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 {{tag|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 {{tag|fixed charge}} which didn’ require them<ref>Unless it qualified under the {{tag|Financial Collateral Directive}} ({{eudirective|2002|47|EC}}</ref>. | 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 {{tag|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 {{tag|fixed charge}} which didn’ require them<ref>Unless it qualified under the {{tag|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, | *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, 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=== | ||