Research On The Bankruptcy Problem Of Floating Charge

The core characteristics of the floating charge is: the floating charge is a movable property charge,the floating collateral keeps changing,the floating chargor is entitled to free disposal,and the floating collateral can be crystallized as a fixed mortgage.The handling of floating charge in the bankruptcy process faces four problems: the revocation of preferential transfer,the automatic freezing of floating charge,the management and disposal of floating collateral,and the crystallization of floating collateral.The revocation of preferential transfer occurs during the critical period of bankruptcy.The main problems are: First,whether the fluctuation of the floating collateral during the critical period of bankruptcy constitutes “subsequent guarantee”;Second,whether there is an exception to the revocation of preferential transfer.General security interest can be distinguished based on the type of the guarantee: registration countervailing guarantee,registration enforcement guarantee,and statutory guarantee.For registration countervailing guarantee,the registration is not an“subsequent guarantee” and is an exception.For registration enforcement guarantee,if the guarantee is registered within a reasonable period after the debt is established,it does not constitute a “subsequent guarantee” and is an exception.If the guarantee is registered within an unreasonable period,it constitutes a “subsequent guarantee”.Statutory guarantees should be based on different legal relationships.Here I suggest that we could set the increment of the value of floating collateral to increase the guarantee status of floating charge as the constituent element of “subsequent guarantee”,and clarify the calculation rules to determine the exception through judicial interpretation.The automatic freezing of floating charge occurs within the reorganization process.The specific problems are: First,the scope of automatic freezing for floating collateral is not distinguished;Second,the condition for automatic unfreezing is single.The same problems exist in general security interest.Here I suggest that the automatic freezing of floating collateral can be differentiated according to the criteria "necessary for reorganization".And the alternatives to automatic unfreezing can be supplemented,such as allowing the debtor to provide additional or alternative guarantees.In the event that the debtor has provided additional or alternative guarantees and the floating charge is still damaged,the automatic freezing of the floating charge may be lifted.The management and disposal of floating collateral lacks supervision in the bankruptcy process,mainly in the following aspects: First,the information disclosure system is not perfect,and the floating chargee lacks the right to information;Second,the authority of the manager or the debtor is not restricted.The same problems exist in general security interest.Here I suggest that in terms of information disclosure,we could stipulate the full obligation of the debtor’s information disclosure through the comprehensive provisions,and stipulate the typical information disclosure list through enumeration clauses.We could also set up the hearing procedure and the “in-theprocess reporting” policy during bankruptcy procedures.In terms of authority restrictions,we could distinguish the disposal behavior for floating collateral and set up a hearing procedure to handle disputes.The ratio of the value of the floating collateral at the beginning of reorganization to the amount of the debt can be used as a reference standard to measure whether the floating charge is damaged.The mehods of compensation for damage should be stipulated.The crystallization problems of floating collateral in the bankruptcy process are:First,the crystallization reason is not comprehensive;Second,the crystallization time is not clear.Here I suggest:First,to refine the crystallization reason of floating collateral in the bankruptcy process.The debtor’s bankruptcy application can be used as a crystallization reason.If the liquidation procedure is not entered,the crystallized collateral can be re-converted into a floating mortgage.Within the reorganization procedure,if the floating collateral damages the floating charge due to loss or reduced value,it should be the reason of cystallization.Second,to clarify the crystallization timing.The time of bankruptcy application shall be the timing for crystallization.Within the reorganization procedure,when the collateral is damaged or the value is reduced and the floating charge is jeopardized,it should be the crystallization timing.