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 subject to the later floating charge. On crystallisation, the later charge took priority. Under the section, the preferential creditors had overall priority. The assets available to pay the liquidation expenses included the assets subject to the floating charge even though that had crystallised before they were incurred: ‘a holder of a subsequent fixed charge which has been made subject to a prior floating charge – either by express provisions in the fixed charge itself or by a restriction in the floating charge of which the holder of the fixed charge had notice – takes his security upon terms that, if before the charged property has been realised under that fixed charge events occur which cause the floating charge to crystallise, then the proceeds of realisation must be paid to the holder of the floating charge; the holder of the fixed charge can have no claim upon those proceeds until the claims under the floating charge have been paid out.’
References: [1993] Ch 388
Judges: Chadwick J
Statutes: Insolvency Act 1984 175(2)
Jurisdiction: England and Wales
This case cites:
- Applied – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .
([1979] 2 LL Rep 142) - Applied – In re Camden Brewery 1911
. .
([1911] 106 LT 598) - Distinguished – In re Woodroffes (Musical Instruments) 1985
. .
([1985] 2 All ER 908) - Followed – Waters v Widdows 1984
. .
([1984] VR 503) - Not followed – In re Christonette International Ltd 1982
In the case of a compulsory liquidation the date on which a floating charge is crystallised was the date on which the winding up order was made and not the date on which the winding up petition was presented. . .
([1982] 1 WLR 1245) - Applied – In re Barleycorn Enterprises Ltd; Mathias and Davies (a Firm) v Down CA 1970
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 . .
([1970] Ch 465)
This case is cited by:
- Doubted – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .
([2004] 2 WLR 783, [2004] 1 All ER 981, [2004] BCC 51, [2004] 1 BCLC 335, , [2004] EWHC 9 (Ch)) - Distinguished – Griffiths and Another v Yorkshire Bank Plc and Others ChD 7-Oct-1994
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. . .
(Gazette 07-Oct-94, [1994] 1 WLR 1427) - 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 . .
([2005] 2 All ER 1000, [2004] All ER (D) 390, Times 04-Jun-04, , Gazette 10-Jun-04, [2004] EWCA Civ 670) - Cited – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .
([2005] 3 WLR 58, [2005] 2 AC 680, [2005] 4 All ER 209, [2005] All ER (D) 368, [2005] 2 Lloyds Rep 275, [2005] 2 BCLC 269, [2005] BCC 694, , [2005] UKHL 41, , Times 31-Jul-05)
These lists may be incomplete.
Last Update: 27 November 2020; Ref: scu.191962