The property comprised in a floating charge forms part of the assets of a company for the purposes of paying (1) costs and expenses of winding up as well as (2) preferential debts.
Phillimore LJ said: ‘Mr Wooton’s submission [for the debenture-holder] . . was that if there were . . assets not covered by some floating charge . . then the proper order for payment would be: first, the costs of the winding up; secondly, the preferential debts; and thirdly, the floating charge. On the other hand if there were no free assets and everything was covered by the floating charge, then the order would be: first, the preferential debts; secondly the floating charge; and, thirdly, the costs of the winding up . . I find it very difficult to defend the logic which would make the order of priority as between costs and preferential debts dependent upon whether or not there was a floating charge.’
Judges:
Lord Denning MR and Sachs and Phillimore L JJ
Citations:
[1970] Ch 465
Statutes:
Jurisdiction:
England and Wales
Cited by:
Overruled – Buchler and another (as joint liquidators of Leyland DAF Limited) v Talbot and another (as joint administrative receivers of Leyland DAF Limited) and Stichting Ofasec and others HL 4-Mar-2004
The liquidator sought to recover his expenses from assets charged under a floating charge in priority to the chargee.
Held: Barleycorn was decided in error. The liquidators costs incurred in an insolvent winding up were not to be charged . .
Applied – 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 . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 11 June 2022; Ref: scu.194247