Fixed And Floating Charges – An Update From The High Court

A recent High Court ruling in April 2023 has clarified one of the key distinctions between fixed and floating charges, namely how the ability to deal with the charged assets can determine if a charge is fixed or floating.

The decision offers important insights for administrators and secured and unsecured creditors.

Fixed v floating charges

A fixed charge is a security interest over specific assets, such as land or buildings.

If the company wants to sell or dispose of this asset, they will either have to seek the lender's permission or repay any outstanding debt to the lender to release the charge before the asset can be sold or disposed of.

Other obligations include keeping the charged asset in good condition and repair and insuring it against loss or damage.