In January, Pilgrim Ltd grants Bank X a floating charge over all its assets, with no negative pledge clause. In June it grants Bank Y a fixed charge over its factory. Both charges are properly registered. In a later liquidation, which charge has priority over the factory?

Correct answer: D) Bank Y's fixed charge, despite being created later

Explanation

A floating charge allows the company to deal with its assets in the ordinary course of business, including granting later fixed charges. A later fixed charge therefore generally takes priority over an earlier floating charge. This is different only if the floating charge contains a negative pledge clause and the fixed charge holder has notice of it. There was no such clause here.