4 results
1 - The ‘Pre-History’ of Floating Charges in Scots Law
- Edited by Jonathan Hardman, University of Glasgow, Alisdair MacPherson
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- Book:
- Floating Charges in Scotland
- Published by:
- Edinburgh University Press
- Published online:
- 18 November 2022
- Print publication:
- 30 June 2022, pp 3-61
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Summary
A. INTRODUCTION
B. SCOTS COMMON LAW
(1) Roman law
(2) Early Scots law
(3) Institutional period
(a) Corporeal moveable property
(b) Heritable property
(c) Incorporeal moveable property
(d) Comparative law
(e) General hypothec – doctrinal obstacles
C. ENGLISH LAW
(1) English law and Roman law
(2) Emergence of the floating charge
(3) The floating charge controversies
D. THE ‘ENGLISH’ FLOATING CHARGE AND SCOTS LAW
(1) The influence of terminology
(2) Rejection of the floating charge
(a) Late nineteenth century
(b) Ballachulish Slate Quarries Co Ltd v Bruce
(c) Commentary
(3) Opposition to floating charges
(4) Demand for floating charges?
E. AGRICULTURAL CHARGES
(1) Nature and operation
(2) Contemporary commentary
(3) Floating charges and agricultural charges
F. LATER DEVELOPMENTS
(1) Increasing support for floating charges?
(2) Re Anchor Line
(3) Carse v Coppen
G. CONCLUSION
A. INTRODUCTION
An account of floating charges in Scots law should not begin merely with the arrival of the statutory floating charge in 1961. Rather, it is important to also understand the relationship between ‘floating’ security and Scots law prior to the Companies (Floating Charges) (Scotland) Act 1961. This can be described as the ‘pre-history’ of floating charges and is the focus of the present chapter.
The Scots common law rules on creating security rights are restrictive and long established. The position espoused principally by the institutional writers remains broadly applicable today. However, statutory creations, most notably the floating charge, have changed the landscape in this area. Exploring the reasons for Scots law's earlier rejection of security rights comparable to floating charges can help us assess whether this remained a justifiable approach as time progressed. After examining the common law position in Scotland, including with reference to Roman law and early Scots law, the chapter will consider the development of the floating charge in English law. This form of security was explicitly rejected by Scottish courts but later served as a model when the reform of security over moveable property was being considered by the Law Reform Committee for Scotland (LRCS), which led to the introduction of the statutory floating charge. The controversial status of the floating charge in English law, after it first appeared in the mid-to-late nineteenth century, may help explain why there was little pressure to introduce a similar security in Scots law until well into the twentieth century.
11 - The Empirical Importance of the Floating Charge in Scotland
- Edited by Jonathan Hardman, University of Glasgow, Alisdair MacPherson
-
- Book:
- Floating Charges in Scotland
- Published by:
- Edinburgh University Press
- Published online:
- 18 November 2022
- Print publication:
- 30 June 2022, pp 442-472
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Summary
A. INTRODUCTION
B. THE MACRO PICTURE
(1) Methodology
(2) Results
(3) Implications
C. THE MICRO PICTURE: RECENTLY LIQUIDATED COMPANIES
(1) Methodology
(2) Results
(3) Implications
D. THE MICRO PICTURE IN CONTEXT: TERMS OF FLOATING CHARGES
E. CONCLUSION APPENDIX
A. INTRODUCTION
The rest of this book outlines the historical, theoretical and practical elements of the floating charge in Scotland. In this chapter, we explore empirically how important the floating charge is for Scottish companies. Empirical research provides an original method of reviewing the world as we find it. Companies are usually brought into existence by registration at Companies House. Fixed securities and floating charges created by a company must be registered against that company at Companies House within twenty-one days of their creation to be valid. The records of Companies House are freely available and ripe for empirical study. This chapter examines Companies House data and uses three different empirical techniques to review the floating charge in practice.
First, Companies House is subject to freedom of information requirements and therefore we submitted freedom of information requests to ascertain the macro picture regarding the creation of floating charges. Secondly, we utilised data obtained on Scottish companies who filed certain insolvency (liquidation) forms between 1 October 2019 and 30 September 2020 to review this set of companies and identify their use of floating charges. Thirdly, we reviewed a sample of the floating charges granted by such companies to identify and examine certain key terms included in these instruments.
Legal empirical research has been compared to attempts to verify a pre-existing hunch and, as such, legal empirical research does not need to be held up to the same level of statistical scrutiny that other social sciences require. Our first method of analysis overcomes any risk, as it presents a holistic overview of the floating charges granted by Scottish companies. Our second and third methods rely on a smaller sample, and therefore there may be limits as to their extrapolability. Nonetheless, our results are stark – the floating charge is an integral part of Scottish corporate finance. In addition, our examination of the terms of a sample of floating charges shows some commonplace terms and variations thereof and highlights the potential for future research.
9 - The Ranking of Floating Charges
- Edited by Jonathan Hardman, University of Glasgow, Alisdair MacPherson
-
- Book:
- Floating Charges in Scotland
- Published by:
- Edinburgh University Press
- Published online:
- 18 November 2022
- Print publication:
- 30 June 2022, pp 345-399
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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’.
3 - The Genesis of the Scottish Floating Charge
- Edited by Jonathan Hardman, University of Glasgow, Alisdair MacPherson
-
- Book:
- Floating Charges in Scotland
- Published by:
- Edinburgh University Press
- Published online:
- 18 November 2022
- Print publication:
- 30 June 2022, pp 102-156
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- Chapter
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Summary
A. INTRODUCTION
B. THE ROAD TO REFORM
(1) Growing support for reform
(2) A response to economic problems
C. THE LAW REFORM COMMITTEE FOR SCOTLAND PROJECT
(1) The LRCS remit
(2) Problems and a solution
(3) Comparative law
(a) England
(b) USA
(c) Germany
(d) Other Civilian jurisdictions
(e) Lessons learnt
(4) The scope of the floating charge
(5) Reactions to the Eighth Report
D. THE LEGISLATIVE PROCESS
(1) Departmental disputes
(2) Pressures
(3) Forbes Hendry's Bill
(4) Passage of the Companies (Floating Charges) (Scotland) Bill
E. PROVISIONS OF THE COMPANIES (FLOATING CHARGES) (SCOTLAND) ACT 1961
(1) ‘Definition’ of floating charge
(2) Attachment
(3) Definition of ‘fixed security’
(4) Ranking
(5) Diligence
(6) Registration of charges
(7) Assignation of floating charges
(8) Receivers
F. CONCLUSION
A. INTRODUCTION
The introduction of the floating charge was a watershed moment for Scots commercial law. It represented a significant departure from the pre-existing law of security rights, and involved a conscious attempt to more closely align Scots law with English law. There were only ten years between the expression of judicial antipathy to floating charges in Carse v Coppen and an adapted version of the English floating charge being introduced by the Companies (Floating Charges) (Scotland) Act 1961 (the 1961 Act). The following decades have, however, witnessed much uncertainty and litigation regarding the operation of floating charges. On this point, the drafting of relevant legislation has often been criticised as ambiguous and unclear. This has hindered the development of a coherent law of floating charges in Scotland. The genesis of various important provisions that remain applicable within the Companies Act 1985 and Insolvency Act 1986 can be tracedto the 1961 Act, as can the registration of charges regime which is now found within the Companies Act 2006 in altered form. Consequently, an enhanced awareness of the origins of legislative provisions and their original intended purpose may be useful for the future progress of the law.
Some commentators have reflected upon the arrival of the floating charge and discussed provisions of the 1961 Act, while also commenting on the Report by the Law Reform Committee for Scotland (LRCS) that preceded and precipitated that legislation. However, there has been little examination of the circumstances and process(es) that culminated in the enactment of the 1961 Act as well as the origins of its provisions.