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Dear Mike,
Trust you’re doing well and 2023 is going smoothly?
I’d like to ask – In addition to negative pledge being a clause that requires notice to be sent to floating charge debenture holders of a company’s intention to create a fixed charge on same assets and as you explained ” they may decide to seek repayment or be okay with it”, does the clause not place a restriction on the ranking of fixed charge over the floating charge in case of crystallization and the floating charge was created prior to the fixed and with negative pledge inclusion?.. as I read somewhere that the effect of a negative pledge is to restrict the ranking of subsequent fixed charge holder with notice of a negative pledge on the asset in crystallization and rank floating charge above.
Secondly, is it possible that fixed and floating charge are created over same assets, as I understood that fixed charge is to specific (fixed assets) and floating charge is to non-specific (current assets) and the charge is actually defined by the nature of the assets attached and not as named??
I would imagine (!) that, when a floating charge debenture holder is informed of the intention to create a fixed charge over the affected asset, it could be made available for that floating charge debenture holder to claim a priority over that later fixed charge
But, to be honest, I’m really not 100% on that
As for both fixed and floater over the same asset … it would not be atypical for a floater to be created to cover ‘the assets generally’ of the company
Thus it should be easy to see that a fixed could be created over specific assets that are already included within the general category of ‘the assets generally’
Does that do it for you?
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