... of assets present and future and those assets can change from time to time in the company's ordinary course of business.2 Under a floating charge, the company remains free to carry on business in the normal way in relation to those assets until there is crystallisation of the charge3. Crystallisation arises when some event occurs such as default by or the insolvency of the company. The chargee may then terminate the company's permission to deal with the charged assets and affirm his security rights over them. 3. Importance of the distinguishing fixed and floating charges A distinction between a fixed and a floating charge is important given the implications for the order of payment to creditors from the assets of a company in liquidation. A fixed charge has priority over preferential creditors and unsecured creditors while a floating charge holder will rank before the unsecured creditors but only after the preferential creditors.4 In particular, ...

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