Floating charge (virksomhedspant)
Also known as company charge, charge over business assets
A floating charge covers the company's changing assets as a whole — stock, equipment and receivables, as they stand from day to day.
- Covers
- Changing categories of assets
- Registered
- In the Danish personal register
- Typically held by
- The company's bank
In practice
An ordinary charge attaches to a specific item. A floating charge does something else: it covers categories of assets as they are replaced over time. Today’s stock is not the stock of six months hence, but the charge follows along.
That is why the construction exists — a manufacturer can give security without tying up particular machines, and the bank gets security that tracks the business. The charge has to be registered to be effective against other creditors.
For an ordinary supplier it is information worth obtaining. If there is a floating charge over the customer, a large part of the assets you would otherwise look to in a bankruptcy has already been pledged to somebody else.
Where it commonly goes wrong
- Reading the balance sheet and assuming recovery. The assets can be there and still be charged.
- Overlooking registration. An unregistered charge gives no protection against other creditors, and that is what settles the order.