The floating charge under the PPSA: The current state of play

Abstract

Since its recognition by 19th-century English courts, the floating charge has been a form of security favoured by lenders and corporate borrowers. Although the Personal Property Securities Act 2009 (Cth) (PPSA) is generally acknowledged as modifying this charge when taken over personal property (as defined), both the manner and the extent of modification are controversial. This article contends that the floating charge over personal property is absorbed into the statutory regime as a security interest over present and after-acquired property, thereby attracting statutory attributes. It thus challenges judicial dicta recharacterising the floating charge (and other property interests constituting security interests) as a new statutory generic interest. As a matter of statutory construction, the property interest created by the parties operates under s 19 of the PPSA as a fixed, rather than floating, security interest. Consequently, the article further contends that the PPSA necessarily addresses the grantor's ability to deal with the collateral differently from the general law, and infers that additional statutory rules may be required to address commercial demands.