RE Avanti Communications Limited (In Administration) – Characterisation Of Security As Fixed/Floating

Key points

• Characterisation involves a two-stage test
• Fixed security does not require absolute control over the secured asset
• Disposal permissions in respect of the secured asset will not automatically compromise fixed security – it is a question of degree
• Case law calls for a nuanced approach to characterisation, taking into account a combination of factors
• The nature of the assets is a key factor: the ability to deal with fluctuating assets is likely to indicate a floating charge, whereas some ability to deal with specific, non-fluctuating assets can be consistent with a fixed charge
• From a Hong Kong perspective, this judgment offers a useful consolidation of numerous English law principles in this area