The Genesis of the Scottish Floating Charge

A. INTRODUCTIONB. THE ROAD TO REFORM(1) Growing support for reform(2) A response to economic problemsC. THE LAW REFORM COMMITTEE FOR SCOTLAND PROJECT(1) The LRCS remit(2) Problems and a solution(3) Comparative law(a) England(b) USA(c) Germany(d) Other Civilian jurisdictions(e) Lessons learnt(4) The scope of the floating charge(5) Reactions to the Eighth ReportD. THE LEGISLATIVE PROCESS(1) Departmental disputes(2) Pressures(3) Forbes Hendry's Bill(4) Passage of the Companies (Floating Charges) (Scotland) BillE. PROVISIONS OF THE COMPANIES (FLOATING CHARGES) (SCOTLAND) ACT 1961(1) ‘Definition’ of floating charge(2) Attachment(3) Definition of ‘fixed security’(4) Ranking(5) Diligence(6) Registration of charges(7) Assignation of floating charges(8) ReceiversF. CONCLUSIONA. INTRODUCTION The introduction of the floating charge was a watershed moment for Scots commercial law. It represented a significant departure from the pre-existing law of security rights, and involved a conscious attempt to more closely align Scots law with English law. There were only ten years between the expression of judicial antipathy to floating charges in Carse v Coppen and an adapted version of the English floating charge being introduced by the Companies (Floating Charges) (Scotland) Act 1961 (the 1961 Act). The following decades have, however, witnessed much uncertainty and litigation regarding the operation of floating charges. On this point, the drafting of relevant legislation has often been criticised as ambiguous and unclear. This has hindered the development of a coherent law of floating charges in Scotland. The genesis of various important provisions that remain applicable within the Companies Act 1985 and Insolvency Act 1986 can be tracedto the 1961 Act, as can the registration of charges regime which is now found within the Companies Act 2006 in altered form. Consequently, an enhanced awareness of the origins of legislative provisions and their original intended purpose may be useful for the future progress of the law.Some commentators have reflected upon the arrival of the floating charge and discussed provisions of the 1961 Act, while also commenting on the Report by the Law Reform Committee for Scotland (LRCS) that preceded and precipitated that legislation. However, there has been little examination of the circumstances and process(es) that culminated in the enactment of the 1961 Act as well as the origins of its provisions.