Rangers Rumours 12436

10 Apr 2012 19:48:23
To the guy below a floating charge. A standard charge is if u borrow 10 quid, then they place a charge. A floating charge means there is no specific amount. People with an offset mortgage will have a floating charge as you are able borrow more without going for a further application! Not.some of the nonsense posted

I think you are confusing a floating charge with a variable interest mortgage .

Err, no. I'm afraid your explanation is incorrect. A standard security (a scots law term - in England the equivalent is commonly called a mortgage or fixed charge) is a security over land and buildings - e.g. Ibrox, Murray Park, car park etc. A standard security can secure "all sums" borrowed from time to time by the granter of the standard security. A floating charge is a different sort of charge - it "floats" until the security holder enforces it. It can also secure all sums. When the security holder enforces it (crystallises it) the charge brings into the security net all of the then assets of the company (excluding any which are the subject of a prior ranking standard security). A bank will typically take both a standard secutity and a floating charge - the standard security to cover land and buildings, the floating charge to pick up everything else such as moveable property (cash in bank, furniture, equipment etc). Anyone who has a "mortgage" will have granted the bank a standard security not a floating charge.

For clarity

A Fixed Charge is over propery and is known in Scotland as a Standard Security.

A Floating Charge or more correctly a Bond & Floating Charge is a security over Current Assets such as Stock and Debtors. The powers contained within a Floating Charge also give the holder the right to appoint an Administrator.

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