ExpertEasy1 markMultiple Choice
ACCA · Question 43 · Insolvency law
What is the legal term for the event where a floating charge converts into a fixed charge, attaching to the specific assets held by the company at that moment?
What is the legal term for the event where a floating charge converts into a fixed charge, attaching to the specific assets held by the company at that moment?
Answer options:
A.
Liquidation.
B.
Crystallisation.
C.
Subrogation.
D.
Novation.
How to approach this question
Identify the term used when something fluid (floating) becomes solid (fixed).
Full Answer
B.Crystallisation.✓ Correct
Crystallisation is the process by which a floating charge ceases to 'float' over a changing pool of assets and becomes a fixed charge on the specific assets owned by the company at that exact time. This usually happens upon default, receivership, or liquidation.
Common mistakes
Confusing the trigger event (like liquidation) with the actual legal mechanism (crystallisation).
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