Fixed and Floating Charge

Hi all,

InvestEd newbie here, so hopefully this isn't a dumb question..

I work in Property Finance in one of the banks..when we fund a property investment (say an industrial lot), we will take a mortgage over the property as security..

but, we also take a Fixed and Floating Charge (FFC) over the related company A i.e. the owner of the property asset as per the Certificate of title..

Why is this so? Doesn't the mortgage already cover the property? Why not take just a mortgage, or just a FFC over company A?

PS: I know the Personal Property Securities Act (PPSA) has already been implemented, so technically this question is outdated, but I would just like to know as this will lead to more queries in regards to the PPSA

 

Hi
A fixed and floating charge gives you more control as the charge would cover other assets of the company such as cash, plant & equipment as well as sale & option agreements which may be of value and relate to the land.

It also allows you as a lender to appoint a receiver who can also consider issues such as insolvent trading as well as the payment of preferential payments.