Distinguish a Fixed Charge from a Floating Charge
ANSWER
Fixed Charge
This is a legal or specific charge. It is a charge securing a debenture on a fixed asset. In Illingworth v Houldsworthit was observed that a fixed charge is specific. The security iscertain or capable of being ascertained.
Floating Charge
This is a charge securing a debenture by the assets of a going concern. In Illingworth vHouldsworth, it was observed that a floating charge is ambulatory and shifting in itsnature. In re Yorkshire wool Combers Association, Romer J. set out the characteristics of a floating charge:
• It is a charge on a class of assets of the company both present and future.
• The class of assets must be one that keep on changing from time to time in the ordinary course of business of the company.
• The charge remains dormant until crystallization.