Companies Act 2014 section 598A

Validity of floating charge in certain circumstances

Section 598A protects certain floating charges created as part of a court-approved scheme of arrangement from being declared invalid during a winding up.

• Floating charges created under a court-confirmed scheme of arrangement receive special protection from invalidation during a winding up
• The charge must have been reasonable, immediately necessary for implementing the scheme, and carried out in accordance with the court-approved scheme
• Where all three conditions are met, the charge cannot be struck down solely on the grounds that it was detrimental to the general body of creditors
• The protection does not apply if there are other separate grounds on which the transaction should be declared invalid