Re Spectrum Plus Ltd
2005 · [2005] UKHL 41, [2005] 2 AC 680
Posted By lanbuk.com
- Facts
- A bank's called its charge over book debts a , but the company could pay the proceeds into its ordinary current account and draw on it.
- Issue
- Was the charge fixed or floating?
- Held
- Floating. Because the company was free to use the proceeds in its business, the charge was floating whatever it was called.
- Principle
- Whether a charge is fixed depends on the chargee's control over the asset and its proceeds, not on the label.
- Why it matters
- It is the leading case on characterising charges.
Words and Latin in this note
- Floating charge
- A charge over a changing class of a company's assets that it may deal with in the ordinary course of business until the charge crystallises. A fixed charge has priority over it: section 151. Open the note.
- Debenture
- A document that creates or acknowledges a debt owed by a company, often secured by a charge. A debenture holder is a creditor, not a member. Open the note.
For study only. By lanbuk.com. Always check current sources and consult a qualified professional.