Fixed charge of non-vesting debts meaning

Liquidation Following enforcement of security by fixed charge creditors for their own benefit, the order of distributions in a winding up is: if liquidation commences within 12 weeks of a moratorium, any unpaid moratorium debts and ‘priority pre‑moratorium debts’ to which no payment holiday applied during the moratorium expenses properly incurred in the winding up (including the liquidator’s remuneration) ordinary preferential debts secondary preferential debts the prescribed part for unsecured creditors (where not disapplied) debts secured by floating charges unsecured debts statutory interest postponed debts (i.e. non‑provable liabilities) return of any surplus to members (subject to adjustment between members) For further details, see Practice Note: Waterfall of payments in liquidation...

Advantages and disadvantages of taking a floating as opposed to a fixed charge This Practice Note examines the advantages and disadvantages of taking a floating, rather than a fixed, charge, mainly from the chargee’s perspective, and why understanding the trade-offs is important. In secured lending, it is common for lenders to place fixed charges over non-variable assets of a company and a floating charge across the balance. This blended approach enables a lender to maximise the key benefits offered by each form of security while achieving coverage across the asset base. Fixed charges, where they can be obtained, usually produce better recoveries on enforcement. By contrast, holding a qualifying floating charge allows a lender to appoint an administrator out of court and to take security over a broader range of assets. Even so, the exact configuration of security over a company’s assets is often negotiated with the borrower. A borrower may, in particular, resist the level of control over its assets that...

This Practice Note sets out a concise overview of the financing structures typically used by UK asset-based lenders and highlights the key English law legal issues encountered when funding receivables (often called book debts) in the asset-based lending market, together with one or more of the following assets: inventory (also referred to as stock) plant and machinery (also referred to as equipment) real estate cashflow loan It also summarises common asset-based lending structures and the principal issues to consider when arranging asset-based financing. Key features of asset-based lending ABL is senior, secured lending primarily intended to fund a trading business’s working capital. Advances are determined by the realisable value of defined classes of a borrower’s assets, collectively known as the borrowing base. ABL is often event-led, offering flexible access to liquidity during periods of transition, such as an acquisition or a restructuring. An asset-based lender invariably provides receivables financing (see: Receivables financing below) as the anchor facility, supplemented by...