To put it another way, total prohibition of all dealings and withdrawals without the consent of the chargee is sufficient to create a fixed charge6. What really matters is the substance of the agreement and how it is practiced, not what is expressed in the agreement or the parties.
Therefore, the question would it be significant to distinguish a charge between a fixed charge and a floating charge. The distinction of a charge is very important when it comes to consequences after debtor’s liquidation because the prioritisation of the chargees. A floating charge could be set aside in certain circumstance; if a floating is created within 12 months before the debtor is insolvent7. Although a floating charge becomes a fixed charge after the events of crystallisation, it is still ranked below secured creditors and preferential creditors. Also, the liquidation procedure called administration is entitled that its expenses …show more content…
The UK already implemented the directive in The Financial Collateral Arrangements (No.2) Regulations 2003. The regulations contain two categories, title transfer financial collateral arrangements and security financial collateral arrangements. Security financial collateral arrangement is the arrangement where the collateral provider creates a security interest over financial collateral and the financial collateral is delivered, transferred, held, registered or otherwise designated so as to be in the possession or under control of the collateral taker, a chargee in this case (or a person acting on its