Floating charge

A floating charge is a security interest over a fund of assets of a company. The actual items that comprise the assets of the company can change over time until the point at which the floating charge crystallises into a fixed charge and the charge attaches to specific assets of the company.

The closest Russian analogue is the pledge of an enterprise as a property complex («ипотека предприятия»). However, despite some similarity there is a world of difference between these two instruments. A floating charge, first of all, is a way to control a debtor since it enables the creditor to appoint an administrator (receiver) without the need for a court order. In other words it is a means of taking hold of the debtor’s business quickly and without an administrative hassle. A pledge of an enterprise, on the other hand, is just a form of security and not the most effective one.

Therefore, we translate floating charge literally — «плавающее обеспечение».

See also: