Fixed and floating charges
You'll learn the distinction between fixed and floating charges, two key security mechanisms in corporate lending that determine creditor priority in liquidation.
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Understanding fixed and floating charges
- 0:12 Fixed charges: specific assets and priority
- 1:01 Fixed charge ranking and invalidation rules
- 1:45 Floating charges: class of assets explained
- 2:29 Floating charge risks and creditor ranking
- 2:51 Availability and invalidation timescales
About this lesson
A fixed charge secures a specific, identifiable asset (like a mortgage on a property) and ranks first for repayment, whereas a floating charge covers a class of assets like inventory or receivables, allowing the company to continue trading with those assets until crystallisation occurs. Understanding when each applies, their ranking in insolvency, and their time-based validity rules (six months for fixed, twelve months for floating) is essential for Corporate and Business Law and will help you analyse creditor protection in case studies and exam scenarios.
Duration: 3m
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the Corporate and Business Law course
All 76 video lessons, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in