Floating Charge IVA Glossary

What is Floating Charge?

A floating charge is a form of security granted to a creditor over general assets of a company which may change from time to time in the normal course of business (e.g. stock). The company can continue to use the assets in its business until an event of default occurs and the charge crystallises. If this happens, the secured creditor can realise the assets to recover his debt, usually by appointing an administrative receiver, and obtain the net proceeds of sale subject to the prior claims of the preferential creditors (e.g. Customs & Excise or Inland Revenue).

(Please Note: The definitions are not intended to be exhaustive summaries of the Law. They are based on material from The Insolvency Act 1986 , and other Acts dealing with this subject.)

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