Which feature most clearly indicates that a charge over stock and receivables is a floating charge?
Answer and explanation
Correct answer: B. The company may carry on dealing with the assets in the ordinary course of business until the charge crystallises
- Step 1: Re Yorkshire Woolcombers describes a floating charge as one over a class of present and future assets that change from time to time.
- Step 2: The company is free to deal with the assets until the charge crystallises, which is the hallmark distinguishing it from a fixed charge.
Answer
The company may carry on dealing with the assets in the ordinary course of business until the charge crystallises.
Why not the others: The form of the document, the identity of the chargee and the value of the debt do not decide whether a charge is floating.
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