Re Avanti Communications Limited (in administration) – evolution of the control required for a fixed charge

The High Court recently issued its ruling in the matter of Re Avanti Communications Limited (in administration). It is the first major case since the pivotal 2005 House of Lords decision of Re Spectrum Plus to examine the characteristics of fixed and floating charges.

Re Avanti Communications suggests that carefully worded exceptions to a complete prohibition on disposal of certain assets – which are very commonly negotiated by borrowers in finance documents - are not necessarily inconsistent with a fixed charge. However, the assets to which any permitted disposal regime applies should not form part of the chargor's circulating capital and the chargor's ability to deal with the charged assets should be materially and significantly limited.

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