Floating Charge

Floating Charge is a security that has an underlying asset which is governed by change in amount and value. Corporations can use floating charge and it doesn’t affect their capability to use the main asset as usual. If the organization fails to pay the loan or goes into liquidation, does the floating charge become “crystallized” or frozen right fixed charge. At that point the financial institution becomes the first-in-line creditor can draw against the actual underlying asset as well as its value to be able to recoup its loss on the loan.