Question :
When no specific asset but all assets (except those charged by way of fixed charge) are charged as security. A Floating Charge holder has a preference over an unsecured creditor for settling his claims, in the event of winding-up of the company.
Option 1: Fixed charge
Option 2: Floating charge
Option 3: Interest
Option 4: Current assets
Correct Answer: Floating charge
Solution : Answer = Floating charge
In the event of a company winding up, a floating charge holder has a preference over unsecured creditors for settling claims. A floating charge is a security interest over a fluctuating pool of assets, allowing the company to continue operating and disposing of assets until the charge crystallizes, typically upon insolvency.
Hence, the correct option is 2.
