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Fixed Or Floating? The Future For Small Companies Executive Summary: This ...


Fixed or Floating? The Future for Small Companies
Executive Summary: This work looks at some of the key aspects in the relationship between a corporations creditors and the company. I look at the development of the floating charge and the recent jurisprudence over the distinction between a floating and fixed charge. I come to the conclusion that the law fairly represents the constituents and there is no need for reform of the law especially as refers to the distinction between the two types of charges. I then look at the risk for unsecured creditors following the Enterprise Act 2002 and conclude that a lack of sophisticated focus has skewed the debate into focusing on the differences between secured and unsecured creditors when the true difference relates to the Insolvency Proceeding chosen. Finally we analyse the Small Firms Loan Guarantee Scheme in light of the recent Graham Review that has substantially changed it's nature. Overall we conclude that the future for Small Companies is to some degree dependant on a balance between these various areas and we suggest some tentative reforms to some of the areas.Chapters
IntroductionPage 3
Fixed or FloatingPage 5
IntroductionPage 5
The Creation and Mutation of the Floating ChargePage 5
Legislative ImpactPage 19
ConclusionPage 20
Unsecured CreditorsPage 25
Small Firms Loan Guarantee SchemePage 28
ConclusionsPage 35


Introduction
The tendency in modern scholarly material is to focus on the responsibility of corporations in modern society. There are great rafts of legislation that affect the duties of directors of corporations in areas such as employment, environment, health & safety and tax. The classic paradigm of a corporation was always understood as ‘an association of stockholders framed for their private gain and to be managed by its board of directors solely with that end in view'. However, ever since the writings of Adolf Berle in the 1930's there has been increasing recognition that legislative and judicial intervention is required to alter the way corporations interact with other constituents, of particular interest for this work is the focus on the way that smaller corporations interact with their creditors.
This work is largely concerned with the operation of fixed and floating charges which are the typical manner of security that creditors will obtain from corporations to secure repayment of their loan. The aim of the work is to look at the various legal mechanisms which facilitate the debt financing of small corporations and what the future may hold for them. In particular we look at three potential areas law reforms: The necessity of having the statutory and judicial framework which attaches consequences to title as opposed to allowing freedom of contract, between the parties, the increase in credit risk to unsecured creditors and its relationship to secured lending and finally the operation and remit of the Small Firms Loan Guarantee Scheme.

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