Re Spectrum Plus Ltd (In Liquidation) (2005) clarified the distinction between fixed and floating charges. The House of Lords ruled that a charge over book debts allowing the company to use proceeds freely is a floating charge, impacting creditor priorities in insolvency.
Fixed vs. Floating Charge Clarification: The case clarified that a charge over book debts, where the company retains control over the proceeds, is a floating charge. This distinction is crucial in determining the ranking of creditors' claims in insolvency, affecting their potential recovery.
