Letter Confirming Floating Charge Has Not Crystallised (Asset Sales)

In a business/asset sale, the seller may have granted a floating charge as security for lending. A floating charge can attach to the business’s assets when it crystallises.

A buyer will usually want comfort that any floating charge has not crystallised and that the holder of the floating charge has not taken steps to crystallise it. If it has crystallised, it may become a fixed charge attaching to the assets, and the buyer could acquire the assets subject to that fixed charge.

What does Letter Confirming Floating Charge Has Not Crystallised (Asset Sales) do?

It provides a letter for use in an asset sale to confirm that a floating charge has not crystallised and that no steps have been taken to crystallise it.

What does Letter Confirming Floating Charge Has Not Crystallised (Asset Sales) cover?

• Confirmation that the floating charge has not crystallised.
• Confirmation that the charge holder has not taken steps to crystallise the floating charge.
• A document intended to support the buyer’s position on completion where asset security is relevant.

When should you use Letter Confirming Floating Charge Has Not Crystallised (Asset Sales)?

Use this letter where the seller has granted a floating charge and the buyer requires confirmation, as part of the completion arrangements, that the charge has not crystallised so the buyer does not acquire the assets subject to a fixed charge.

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