Court Court of Appeal | Citation(s) [1994] 1 BCLC 485 | |
Re New Bullas Trading Ltd [1994] 1 BCLC 485 is a UK insolvency law case, concerning the definition of a floating charge. It is outdated as authority, in light of the House of Lords decision in Re Spectrum Plus Ltd.
Contents
Facts
New Bullas Trading Ltd granted a charge over book debts in favour of 3i plc. It said this was a fixed charge over the uncollected debts and a floating charge over their proceeds, which went into a designated bank account (or another one that 3i could specify in writing).
Knox J held this was impossible. He said there was a floating charge throughout, so the company’s preferential creditors were entitled in a receivership to priority under IA 1986 s 40 with regard to uncollected debts.
Judgment
Nourse LJ overturned the decision. He held that a charge may be divisible, and the parties had unequivocally expressed their intention and ‘unless there is some authority or principle of law which prevented them from agreeing what they have agreed, their agreement must prevail’. In essence, he held that the wording did allow them to have such a form of security, the parties were free to make such arrangements. He said unless, unlawful, the free will of the parties would prevail.