Invalid floating charges are automatically void under section 245 of the Insolvency Act 1985. The general principle of the relevant provisions is that a floating charge created in the period leading up to the winding-up of the company is automatically void unless it concerns new monies, goods or services, or the discharge or reduction of a debt. The provisions do not cover fixed charges unless originally created as a floating charge. Fixed charges may still be challenged as preferences, however – see below.
