Floating charge, that is, enterprise guarantee, refers to a guarantee set by an enterprise with its existing assets. Its subject matter is all the property of the enterprise now and in the future, including all movable and immovable property, intangible property and various legal relations of the enterprise. After the establishment of the guarantee, the enterprise continues to operate with the property as the guarantee target, and its assets can still be used normally, and the newly acquired property is automatically included in the collateral. Only when there are certain circumstances stipulated by law, such as the debtor's default, the debtor's company's suspension of production or bankruptcy liquidation, can the collateral be designated, and the floating guarantee becomes a fixed guarantee or a compulsory guarantee. The law stipulates that movable property such as equipment, raw materials, semi-finished products and product mortgages can be used as collateral for floating mortgage.
Floating charge is different from fixed charge in the usual sense. It does not mortgage specific or determinable property. Its main features are:
1. The subject matter belongs to all the properties that the mortgagor has or will have.
2. These properties are in a constantly changing state in the daily production and operation of the mortgagor.
3. Before the mortgagee or his agent takes some action in the future, the mortgagor can continue to operate in the usual way.
To sum up, floating mortgage is a special kind of mortgage, which refers to the guarantee set by the mortgagor with all or part of his present and future property. Before exercising the mortgage right, the mortgagor reserves the right to dispose of the mortgaged property in the normal business process.
Legal basis:
Article 396 of the Civil Code of People's Republic of China (PRC)
Enterprises, individual industrial and commercial households and agricultural producers and operators may mortgage existing and future production equipment, raw materials, semi-finished products and products. If the debtor fails to perform the due debt or realize the mortgage right according to the agreement of the parties, the creditor has the right to be paid in priority for the chattel when determining the mortgaged property.
Article 4 1 1
Where a mortgage is established in accordance with the provisions of Article 396 of this Law, the mortgaged property shall be determined under any of the following circumstances:
(a) the debt has expired and the creditor's rights have not been realized;
(2) The mortgagor is declared bankrupt or dissolved;
(3) The circumstances for realizing the mortgage agreed by the parties;
(4) Other circumstances that seriously affect the realization of creditor's rights.
Article 4 12
If the debtor fails to perform the due debts or the realization of the mortgage agreed by the parties occurs, resulting in the mortgaged property being sealed up by the people's court according to law, the mortgagee has the right to collect the natural fruits or legal fruits of the mortgaged property from the date of sealing up, except that the mortgagee has not notified the debtor who should pay off the legal fruits.
The fruits specified in the preceding paragraph shall be used as the expenses for collecting fruits first.