Skip to main content Accessibility help
×
Hostname: page-component-7479d7b7d-pfhbr Total loading time: 0 Render date: 2024-07-12T17:16:02.245Z Has data issue: false hasContentIssue false

9 - The Ranking of Floating Charges

Published online by Cambridge University Press:  18 November 2022

Jonathan Hardman
Affiliation:
University of Glasgow
Get access

Summary

A. INTRODUCTION

B. GENERAL RANKING RULES

C. DEFAULT RANKING RULES FOR FLOATING CHARGES

(1) Against voluntary fixed securities

(2) Against fixed securities arising by operation of law

(3) Against other floating charges

(4) Against diligences

(5) Against other security rights

D. NEGATIVE PLEDGES

E. RANKING AGREEMENTS

F. ATTACHMENT, RANKING AND ENFORCEMENT

(1) Attachment and ranking

(2) Appointing and enforcing

G. RANKING AND DISTRIBUTION

(1) Liquidation

(2) Receivership

(3) Administration

(4) Enforcement by fixed security holder

H. FURTHER RANKING ISSUES

(1) Circles of priority

(2) Catholic and secondary security

(3) Offside goals rule

I. CONCLUSION

A. INTRODUCTION

A floating charge and the debt it secures do not exist in isolation. They need to interact with other obligations due by the granter and other claims on the granter's property. In common parlance it is said to be necessary to establish how security ‘ranks’. Ranking denotes a comparison between two things: whether X is preferred to Y. In a legal context, ranking often focuses on respective priorities as far as an asset is concerned: how X ranks against Y in respect of asset Z. However, the term ranking in its wider sense actually aggregates two key concepts together. First, the freedom enjoyed by the granter in respect of the assets over which security is granted prior to its enforcement: is the granter free to dispose of the asset (and, if so, what happens to any proceeds), and are there any other restrictions on what can be done with the relevant asset? This can be seen as a form of ranking between a secured creditor and the granter as to control over the use of the asset in question. Secondly, the respective priorities of creditors’ claims in competitions involving assets, which is particularly relevant in the context of insolvency. The most thorough and systematic categorisation of commercial law principles in Scotland comes from George Joseph Bell, who himself had a considerable underlying interest in insolvency law. Indeed, Bell discussed ranking issues at length in the context of the division of a bankrupt's estate and codified certain court decisions dealing with competitions between secured creditors (including diligence creditors) in his ‘canons of ranking’.

Type
Chapter
Information
Floating Charges in Scotland
New Perspectives and Current Issues
, pp. 345 - 399
Publisher: Edinburgh University Press
Print publication year: 2022

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×