A floating charge is security over all assets of a company or LLP which gives the lender or charge holder the right to have the assets and proceeds of their sale directed to discharge the debt between the lender and the borrower. It is an encumbrance over all assets of the company or LLP.
Can an LLP grant a floating charge?
Yes, an LLP is a body corporate with a separate legal personality from its members. Although LLPs are treated slightly differently to companies under the Companies Act 2006 (the Act), the Act’s security registration system does apply to LLPs.
However, other forms of partnerships are limited in their ability to grant floating charges and other security. When providing commercial finance and taking security, it is essential to understand the legal nature and status of the borrowing business as this may materially affect the value of the floating charge or any other security provided.
If you are looking for clarity and advice in relation to a fixed and floating charges contact the Francis Wilks & Jones commercial finance team today. The commercial finance team are experts in the legal aspects of business finance. Call today to discuss your needs with a member of the team.