IVA Glossary
F
Fixed Charge
A creditor may be the holder of a fixed charge over a property owned by a debtor. Whenever a debtor defaults on his loan/s, and the creditor holds a fixed charge against him, he can recuperate his loss by having the debtor selling his/her property.
If there are also other loans secured against that respective property, the holder of the fixed charge is the first in line who is eligible to recuperate his losses. A fixed charge can be issued against a residential property, commercial property or any other type of property that the loan has been secured against. Fixed charges grant the right to sell the property and retain the debts. In cases of insolvency related matters it is always the holder of a fixed charge who also has priority over a holder of a floating charge.
Also, by holding a fixed charge, the creditor may limit the powers of the debtor over his own assets or property. For example, the debtor may not sell the property without the consent of the charge holder. When there exists a fixed charge over a company, this may include not only the real property itself, but also equipment, plant and machinery, insurance and intellectual property rights.
If there are also other loans secured against that respective property, the holder of the fixed charge is the first in line who is eligible to recuperate his losses. A fixed charge can be issued against a residential property, commercial property or any other type of property that the loan has been secured against. Fixed charges grant the right to sell the property and retain the debts. In cases of insolvency related matters it is always the holder of a fixed charge who also has priority over a holder of a floating charge.
Also, by holding a fixed charge, the creditor may limit the powers of the debtor over his own assets or property. For example, the debtor may not sell the property without the consent of the charge holder. When there exists a fixed charge over a company, this may include not only the real property itself, but also equipment, plant and machinery, insurance and intellectual property rights.
