The court considered the application of a company’s assets as between debenture holders and other chargees upon the insolvency of the company. It was the essence of a floating charge that the company could create a prior fixed charge over the asset. Where a second floating charge had been created and was crystallised, becoming a fixed charge, that fixed charge then took priority over the floating charge retained by the first debenture, and that priority was not lost if the first charge was itself subsequently crystallised. Commenting on Portbase: ‘Chadwick J. envisaged two possibilities. One is a restriction in the floating charge of which the holder of the fixed charge had notice, i.e. the 1977 debenture. In none of the cases to which he had earlier referred was this possibility considered or in issue. In my judgment it is not the law that such a restriction affects priorities as a matter of property law whatever may be the contractual result. It is of the essence of a floating charge that proprietary interests having priority over any interest of the holder of the floating charge may be created.’
Judges:
Morritt J
Citations:
Gazette 07-Oct-1994, [1994] 1 WLR 1427
Jurisdiction:
England and Wales
Citing:
Distinguished – In Re Portbase Clothing Ltd; Mould v Taylor 1993
The company had given two debentures, one fixed and one floating. Their priority was fixed by a deed of priority. On insolvency the liquidator sought direction as to the application of the assets.
Held: The deed made the bank’s floating charge . .
Cited by:
Cited – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .
Lists of cited by and citing cases may be incomplete.
Company, Insolvency
Updated: 08 April 2022; Ref: scu.81043