ABSTRACT
The floating charge as a concept undoubtedly affords a considerable amount of preference and control to the creditor who owns it and to the debtor which can continue to deal with the charged assets, and to potentially dissipate them in the normal course of business. Such power may overshadow any preferences and priorities available to vulnerable stakeholders, such as employees, and certainly over involuntary creditors such as tort victims, as there is no limitation on how such charged assets can be dealt with until and unless the collective format of insolvency and restructuring are put into place at a time of financial distress. The purpose of this Chapter is to explore the socio-legal aspects of the floating charge as it affects, specifically, employees, and asks the question as to whether it is possible to achieve fairness by a set priority position, or whether it could be open to abuse due to moral hazards created by the power inherent in the device however and wherever a line is drawn.
Gant, Jennifer, Floating Charges and Moral Hazard: Finding Fairness for Involuntary and Vulnerable Stakeholders (August 8, 2021), https://edinburghuniversitypress.com/book-floating-charges-in-scotland.html.
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