When a floating charge becomes a fixed charge ?


A floating charge would be useless if the lender could not convert it into a fixed charge. In certain circumstances the lender can do this and this process is called ‘crystallization’. A floating charge may crystallize or become fixed in any of the following ways:

1. When the company eases to carry on business; or

2. When the company goes into liquidation; or

3. When default is made in the payment of any principal money or interest and the debenture-holder bring an action to enforce his security; or

4. When a receiver is appointed.