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floating and fixed charges - Coggle Diagram
floating and fixed charges
floating charge
what a floating charge is
charge over present or future property which hovers over property
can deal with property as you wish
Yorkshire Woolcombers Asscoation
charge on a class of assets, if class is one where changing in ordanry course of businessl until some future step taken free to deal with asset
Old Bushmills Distillery
holder can't interfere until charge becomes payable
floating charge behind revenue nad preferential creditors - 621
Re Armagh Shoes
label given is not conclusive
Keenan Brothers
control of asset indicates fixed even though shifting
Re Coslett Contractors
characteristic of fixed charge is agreed control of assets
crystalisation - event - converts to fixed charge
express crystallisatiion clauses
where debenture provides - giving notice
withdrawal of licence to deal with asset
Wogan's drogheda
giving of notice crystalising event
automatic crystallisation clauses
upon occurence of specific event
controversial - rightss of 3rd parties could be affected without notice
not yet be tested in court - courts incline to view that automatic crystallisation would present problems for other creditors who have no actual notice - likely legislation required - according to keane
commencment of winding up
voluntary or involuntary
Re Crompton
no question that according to ordinary principles - winding up ends period of suspension - ends floating nature of security
factual cessation of buessines
The Real Meat Co
adopted it in Ireland - regardless if direcors retain powers
appointment of receiver
holder of charge can appoint a receiver
if one charge holder appoints a receiver all floating charges crystallised
Halpin v Cremin
effect
Tullow Engineering
- charge attaches to each and every item described and freedom to deal with asset is terminated
JD Brian (Belgard Motors)
debentures held by bank create floating charge, allowed notice be served by bank to crystalise charges and convert them into fixed charge - bank served notice prior to liquidation
HC - noice of crystallisation no effect, look at the characteriation of charges at the time - still free to deal with assets - so still floating charge - priority not effected even if crystalised
SC - proper construction, notice did have effect, was a floating charge at creation and validly crystalised by the notice - was fixed charge prior to liquidation and took precedence
Company law review group
companies act 2017 s92 reversed the decision - amends 621 - now preferential creditors rank in priority to those holders of charges created originally as floating charges- crystalisation doesn't move them up
any receiver appointed to floating charge must ensure claims of preferential creditors paid in priority
setting aside
within 12 months of liquidation - s597 - if insolvent
not invalidated if crystalised prior to winding up unless fraud
finance
floating and fixed charges security
registration of company charges
414 and 409
important to register charge - not enforceable until regisration -
Re Monoloithic Building
fixed charge
can't deal with asset without permission from charge holder
Re Spectrum plus
needs some restriction on dealing with assets
on specific asset which is unchanging normally
receivers
role
secure assets
alterantive is petition for winding up, take possession of asset
receiver manager
manages affairs of company until outstanding debt reepaid
Irish Oil and Cake Mills
doesn't need to keep company updated
function
identify, call in, manage or sell of charged assets - pay the principle out of proceeds
debenture can provide for appoint or court can
can't be appointed if company dissolved - powers may be effect if examiner appointed within 3 days
legal status
appointed by debenture holder
creature of contract, agent of debenture holder
appointment supersedes power of company and authority of directors
company unable to dismiss him - primary duty to realise the security
438 - can be personally liable
appointed by court
concern with all creditors interests not just petitioner
done if debenture doesn't give power to appoint receiver
angelus v A.B.N
can apply for receiver immediately when asset that secure cahrge in danger
duties
no duty to provide info to the company
Irish Oil
& Cake* no duty to report to directors
donal kinsella
no general duty to report or account to company
exercise care when disposing of assets
B Johnson & Co
- act with good faith and honesty
439 - exercise all reasonable care - to get best reasonable price
cuckmire rib company v mutual finance
standard of care now higher than good faith, is now reasonable care
Holohan
should have tried selling property with vacant possesion would have gotten more
Re Bula Ltd
- no obligation to wait for market to rise or other possible events to occur
advice from expert
lambert jones estate v donnelly
can ignore if not mose efficient and value way
edenfell holdings
hindsight can't be used to determine which was the better offer
Ruby Properties
- went against directors advice which was to advertise on open market - sold 6 months later by buyer for a lot more
principles
duty of care to company and secured creditors but not to unsecured creditors
not a defence to blame on agents hired by him
best price reasonable obtainable at time of sale
actions and conduct judged on knowledge at the time
once receiver enters contract to sell bound by it
if breached duty pay difference in price
applying proceeds of sale
discharge debt appointed for, any surplus goes to company
united bars
if appointed on floating charge needs to discharge preferential creditors
duty to guarantor
McGowan v Gannon
- guarantor can sue for negligence as there is sufficent proximity - guarantor liable for debts
438 liable for any contract enter by him when perfoming duties
removal
resign 434 - 30 days notice
removed by court - 435
right to remuneration
444