Fixed and floating charge
A fixed and floating charge is a combined security interest under which a lender takes a fixed charge over identified assets and a floating charge over a class of assets that the company may deal with in the ordinary course of business until crystallisation. Companies House defines a charge as the security a company gives for a loan, with a mortgage as one example, and requires registration of company charges on the public record.
Fixed and floating charge use on bank PF and CRE desks
On project finance and commercial real estate desks, a fixed and floating charge often sits inside a security package granted by a borrowing company or SPV. Fixed security typically attaches to land, plant, shares or other assets over which the lender expects control. Floating security typically covers circulating assets such as stock, receivables and cash, so the borrower can trade until an enforcement or insolvency trigger converts the floating interest into a fixed attachment over the assets then held.
English and Welsh practice allows crystallisation triggers to be set in the charge instrument. Explanatory notes to the Small Business, Enterprise and Employment Act 2015 contrast that contractual approach with Scotland, where floating-charge attachment triggers are provided for in statute and parties cannot validly provide by contract alone for a floating charge to attach. That jurisdictional difference matters when a project finance or CRE group spans UK entities in both systems.
Registration, crystallisation and insolvency priority
Companies House guidance requires particulars of a charge to be delivered within 21 days beginning the day after creation. If registration is late, recovery on insolvency may be impaired and a court order is needed to register out of time. Online registration commonly uses form MR01 for a charge created by an instrument, with a certified copy of the instrument shown on the company's public record.
In a winding up, Insolvency Act 1986 section 175 provides that preferential debts, so far as assets available for general creditors are insufficient, have priority over claims of holders of debentures secured by, or holders of, any floating charge created by the company, and are paid out of property comprised in or subject to that charge. Fixed-charge recoveries are analysed separately from floating-charge recoveries because preferential claims bite into floating-charge assets in a way they do not into properly characterised fixed-charge assets.
Characterisation boundaries
Labelling in a debenture is not conclusive. Whether security is fixed or floating turns on the nature of the assets and the degree of control the chargee actually retains. A purported fixed charge over fluctuating assets that the borrower freely deals with may be treated as floating for priority purposes. A negative pledge may restrict further security, but it does not itself convert floating assets into fixed-charge collateral.