Pictured left to right: Lerika Le Grange and Fiona Coady

Earlier this year, SFNet announced its second Cross Border Finance Essay Contest, sponsored by Goldberg Kohn Ltd. Members of SFNet’s International Finance and Development Committee judged the essay submissions on content, originality, clarity, structure and overall contribution to furthering and expanding understanding and discourse within the field of cross-border finance.

This essay won first place. The authors of the winning essays have been invited to participate on a panel at SFNet’s 79th Annual Convention in Orlando, FL, November 15-17. This panel will take place Friday, November 17, at 10 a.m.

The capacity for a lender to take effective security over a changing pool of assets is of critical importance to the asset-based lending market. In England and Wales, floating charge security, developed by English case law in the 19th century, has long been the secured lender’s security interest of choice when it comes to cash, inventory, receivables and other fluid asset classes.

What was once a robust security interest has, over the course of nearly 150 years of challenge through case law and adjustment through statute, evolved into a far more complex beast.

In this article we explore the virtues of the English law floating charge (the “Good”), will demonstrate some of the lesser-known dangers of this security interest for secured lenders (the “Bad”) and will show that, for the unwary secured lender, the floating charge can be downright “Ugly.”

We will also focus on practical steps asset-based lenders can take to improve their position and will look at potential for reform.  

Click here to continue reading the article.