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a chargeholder can prohibit the creation of a later charge with priority but the prohibition is only effective if a subsequent chargee has notice of the prohibition as well as the charge
mike please explain this simplyWhere a floating charge has been created and now a fixed charge is proposed over the same asset (a negative pledge clause) such a clause is ineffective if the proposed fixed charge lender does not have notice of the existing floating charge and the negative pledge clause
mike you mean that if new lender know about the floating charge on asset and negative pledge clause then the fixed charge on same asset is effective
Yes, and no! The negative pledge clause requires the company to notify the floating charge lender of the impending creation of a fixed charge. If the floating charge lender accepts this priority charge, then fine. If not, the floater will likely ask for immediate replacement / repayment
mike you mean its lender of floating charge who has to be notified about the fixed charge and if he agrees to create the fixed charge on same asset then its effective is i am correct
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