ABSTRACT
A creditor’s right to enforce security against assets of the debtor is usually unaffected by the liquidation or bankruptcy of the debtor;2 the exceptions are, first, that questions of registration of company charges become of vital importance once the company is in liquidation; secondly, it may be possible to invalidate the security as a preference;3 finally, s 245 of the Insolvency Act 1986 contains rules, explained in detail below, under which a floating charge may be invalidated by a liquidator or administrator. A floating chargee’s rights are also postponed to those of certain other creditors.4 The holder of a fixed charge is therefore in a more secure position in the event of the borrower ’s insolvency than is a floating chargee; there has therefore been a considerable amount of litigation on the issue of the distinction between the two types of charge which is considered below. Issues around the valid creation of the security, considered briefly in the next section, will be the same before and during a bankruptcy or liquidation.
