Unfairness and Confusion: Inherent Features of Floating Charge Security
The Law Teacher, Vol 46: Issue 2, pp.197-203
7 Pages Posted: 17 Aug 2015
Date Written: May 15, 2012
Abstract
This paper examines the priority hurdles floating charge holders face in a bid to secure their assets during liquidation. In the past three decades, a handful of events triggered by the Insolvency Act 1986 and the Enterprise Act 2002 have arguably spelled out the priority fate of the typical floating charge holder. Some of the keynote events include the prohibition of an administrative receiver appointment, the creation of the ring-fenced fund or prescribed part for the benefit of unsecured creditors, the rulings in the cases of Spectrum Plus and Re Brumark, the charge categorization campaign and the issues in the Re Barleycorn Enterprises Ltd v Re Leyland Daf Ltd case. The paper illustrates that a floating charge in today’s commercial world is somewhat an empty shell, despite its enormity on paper.
Keywords: Floating charge, priorities during insolvency, pari passu, distribution of assets
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