Is a floating charge converted into a fixed charge upon crystallisation?

A floating charge does indeed convert into a fixed charge upon crystallisation. This process typically occurs when specific events trigger the transformation of a floating charge into a fixed charge. Crystallisation can take place when certain conditions are met, such as the appointment of a receiver, the company entering into liquidation, or when the chargeholder takes action to enforce their rights.

Once the floating charge crystallises, it attaches to specific assets that are defined at that point in time, thereby becoming a fixed charge. This means that the charge now applies to identified assets rather than a broader pool of assets that may fluctuate, which is characteristic of a floating charge. The fixed charge gives the chargeholder more control over the assets, as they are no longer subject to the fluctuations or changes that a floating charge entails. This transformation is critical for creditors, as it enhances their security over the assets secured by the charge, providing them with a stronger claim in the event of the company's insolvency.