Qualifying floating charge enforcement: the law and how it works now
A lender with a qualifying floating charge, usually a bank or asset-based lender whose debenture covers the whole or substantially the whole of the company's assets, can put the company into administration without going to court. Once the charge is enforceable, it gives 2 business days' notice to any earlier-ranking charge holder, files a notice of appointment, and the administrator is in office from that moment. Schedule B1 gives the directors no right to advance notice. Since 15 September 2003 a lender whose floating charge was created on or after that date cannot appoint an administrative receiver instead, apart from a few specialist exceptions, which is why receiverships have almost disappeared. Insolvency Act 1986, Schedule B1; Insolvency (England and Wales) Rules 2016
Data as of: the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016 as published on legislation.gov.uk, checked 23 September 2026 · receivership figures from the Insolvency Service release for August 2026, published 18 September 2026 · England and Wales only.
How a charge holder enforces today
These are the steps a qualifying floating charge holder goes through to appoint an administrator, in the order they happen. Each row links to the provision it comes from.
| Step | Rule | Where it comes from | What it means for the company |
|---|---|---|---|
| Is it a qualifying floating charge? | The charge document must say paragraph 14 applies, or give power to appoint an administrator or an administrative receiver, and the holder's security must cover the whole or substantially the whole of the company's property | Sch B1 para 14(2), (3) | A floating charge over only part of the property, with no other security making up the whole, does not give this route |
| Is the charge enforceable? | No appointment while a charge relied on is not enforceable | Sch B1 para 16 | Whether it is enforceable depends on the debenture and facility terms, typically an event of default or a demand that has not been met |
| Anything that blocks it? | Not available if a provisional liquidator has been appointed or an administrative receiver is in office, and not once the company is in liquidation except in limited cases | Sch B1 para 17; Sch B1 para 8 | A winding-up petition that has been presented but not yet heard is not on this list, so it does not stop the charge holder appointing out of court |
| Notice to earlier charge holders | At least 2 business days' written notice to the holder of any prior qualifying floating charge, or that holder's written consent | Sch B1 para 15 | Only earlier-ranking charge holders are entitled to notice. The company and its directors are not |
| Optional: file the notice at court | If a copy of that notice is filed, an interim moratorium runs until the appointment takes effect or 5 business days pass | Sch B1 para 44(2); IR 2016 r3.16 | Other creditors are held off while the charge holder completes its appointment |
| Notice of appointment | Filed at court with a statutory declaration that the holder has a qualifying floating charge, that it is enforceable and that the appointment complies with Schedule B1, plus the administrator's consent and statement | Sch B1 para 18; IR 2016 r3.17; IR 2016 r3.18 | A false declaration the maker does not reasonably believe to be true is a criminal offence |
| Appointment takes effect | When the paragraph 18 filing requirements are met | Sch B1 para 19 | No hearing and no court order. From then on the directors cannot exercise any management power that would interfere with the administrator without the administrator's consent (para 64) |
| Out of court hours | When the court is closed, the notice can be emailed to a designated address. The appointment runs from the time the email is sent but lapses if the paper filing is not completed the next time the court is open | IR 2016 r3.20; IR 2016 r3.22 | An appointment can be made at night or over a weekend. Filing by fax was removed from 22 June 2026 |
| Someone else has already applied to court | The charge holder can still appoint out of court, or ask the court to appoint its own choice instead of the applicant's, which the court grants unless the particular circumstances justify refusing | Sch B1 para 44(7)(b); Sch B1 para 36; IR 2016 r3.19 | A creditor or the directors applying for administration does not stop the bank choosing the administrator |
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When the directors move first
Directors can appoint an administrator out of court too, but the lender gets advance warning and the chance to put in its own choice. That is the main practical difference between the two routes.
| Step | Rule | Where it comes from |
|---|---|---|
| Notice of intention to appoint | At least 5 business days' written notice to anyone who is or may be entitled to appoint an administrative receiver or a paragraph 14 administrator | Sch B1 para 26(1) |
| Directors' earliest appointment | Only after that notice period expires, or earlier if everyone given notice consents in writing | Sch B1 para 28(1) |
| Directors' latest appointment | Within the period of 10 business days beginning with the day the notice of intention is filed at court | Sch B1 para 28(2) |
| Interim moratorium | From filing the notice of intention until the appointment takes effect or the 10 business days run out | Sch B1 para 44(4) |
| Charge holder's response | It can consent, do nothing, or appoint its own administrator under paragraph 14 during the notice period | Sch B1 para 14; Sch B1 para 44(7)(b) |
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If you are preparing that notice, our notice of intention to appoint template covers the board record and what the notice must contain.
Receivership is now rare
The Insolvency Service recorded no receivership appointments in England and Wales in August 2026, against 182 administrations, and 3 receivership appointments in the 12 months to August 2026. Its own glossary explains why: administrative receivership is now restricted to certain types of company, or to floating charges created before September 2003. So for most companies today, a lender enforcing a floating charge through an insolvency appointment does it by appointing an administrator. See the UK company insolvency tracker for the monthly series.
Which rules apply to your lender's charge
The date the floating charge was created decides which regime applies. You can find it on the charge's entry on the company's Companies House record, which gives the date of creation.
| Floating charge created | Can the holder appoint an administrative receiver? | Can it appoint an administrator out of court? | Prescribed part for unsecured creditors |
|---|---|---|---|
| Before 15 September 2003 | Yes, if the debenture gives the power | Yes, if the charge qualifies under paragraph 14 | Does not apply to this charge |
| 15 September 2003 to 5 April 2020 | No, unless one of the statutory exceptions applies | Yes | Applies. Capped at £600,000 where the net property goes to a first-ranking charge from this period |
| On or after 6 April 2020 | No, unless one of the statutory exceptions applies | Yes | Applies. Capped at £800,000 |
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The prescribed part cap rule in the middle row is a simplification. Strictly, the £600,000 cap applies where the net property goes to a floating charge created before 6 April 2020 that no later floating charge ranks equally with or ahead of. The exceptions to the administrative receivership ban are narrow and aimed at large financing structures, such as capital market arrangements and project finance, not ordinary trading companies.
Where the money goes once the charge is enforced
Enforcing the charge does not mean the lender takes everything the floating charge covers. An administrator can deal with floating charge assets as if they were not charged, and the lender's priority moves to whatever replaces them (Sch B1 para 70). Ahead of the floating charge holder come the administrator's remuneration and expenses (para 99), preferential creditors including HMRC for VAT and PAYE-type deductions (s175(2)(b)), and the prescribed part for unsecured creditors (s176A). The full order of payment, and what it means for each class of creditor, is on our fixed and floating charges page. To see how it plays out on your own figures, use the creditor dividend estimator.
Legal landmarks, oldest first
This log is append-only: when the law changes, a new row goes at the bottom and the earlier rows stay as they were, so you can see which rules applied at any date. It covers legislation only. Court decisions have also shaped how floating charges work, but we have not listed any here because we could not check the judgments against their published source when this page was compiled.
| From | Change | Source |
|---|---|---|
| 29 December 1986 | Insolvency Act 1986 in force. A floating charge holder with a debenture over the whole or substantially the whole of the company's property can appoint an administrative receiver. If one is in office, the court must dismiss an administration petition unless the appointer consents or the security itself is open to challenge, so the charge holder effectively has a veto. Preferential debts, which then included Crown debts (Inland Revenue, Customs and Excise and social security contributions), are paid ahead of floating charge holders. A floating charge created in the 2 years before insolvency in favour of a connected person, or in the 12 months before for anyone else if the company was then unable to pay its debts, is invalid except for new value given | IA 1986 s443; IA 1986 s29(2); s9(3) as enacted; IA 1986 s175(2)(b); s245 as enacted |
| 15 September 2003 | Enterprise Act 2002 in force. The holder of a qualifying floating charge created on or after this date may not appoint an administrative receiver (section 72A), except in specialist cases: capital market arrangements, public-private partnerships, utilities, urban regeneration, project finance, financial market charges, social landlords and protected railway and similar companies. Schedule B1 replaces the old administration regime and gives the qualifying floating charge holder its out-of-court appointment route | IA 1986 s72A; SI 2003/2095; ss72B to 72GA; Sch B1 para 14 |
| 15 September 2003 | Crown preference abolished: Inland Revenue, Customs and Excise and social security debts stop being preferential, leaving more for the floating charge holder | Enterprise Act 2002 s251; SI 2003/2093 Sch 1 |
| 15 September 2003 | The prescribed part: a slice of net floating charge realisations is ring-fenced for unsecured creditors. 50% of the first £10,000, plus 20% of the rest, capped at £600,000. It applies only to floating charges created on or after this date, and can be skipped if net property is under £10,000 and a distribution would cost more than it is worth | IA 1986 s176A; SI 2003/2097 |
| 6 April 2008 | Liquidation expenses, including the liquidator's remuneration, can be paid out of floating charge assets where the company's free assets are not enough | IA 1986 s176ZA |
| 6 April 2013 | New charge registration regime. A charge must be delivered to Companies House within 21 days, beginning with the day after it is created. A charge that is not delivered in time is void against a liquidator, an administrator and creditors, so the lender loses its security as against them and the money secured becomes immediately repayable | Companies Act 2006 s859A; s859H; SI 2013/600 |
| 26 May 2015 | An administrator can pay the prescribed part to unsecured creditors without first getting the court's permission | Sch B1 para 65(3) |
| 6 April 2017 | The Insolvency (England and Wales) Rules 2016 come into force. Rules 3.16 to 3.22 set out the charge holder's notice of intention, notice of appointment and out-of-hours filing, which could then be made by fax or email | IR 2016 r3.20 as at 6 April 2017 |
| 6 April 2020 | Prescribed part cap raised to £800,000. The old £600,000 cap still applies where the net property goes to a floating charge created before this date and no later floating charge ranks equally or ahead of it | SI 2020/211 |
| 26 June 2020 | Corporate Insolvency and Governance Act 2020: the new Part A1 moratorium. While it lasts, no steps can be taken to enforce security without the court's permission, permission cannot be sought to crystallise a floating charge, and a clause making the moratorium itself a crystallisation event is void. If administration or liquidation follows within 12 weeks of the moratorium ending, moratorium debts and priority pre-moratorium debts are paid ahead of the floating charge holder | IA 1986 sA21; IA 1986 sA52; Sch B1 para 64A; IA 1986 s174A |
| 1 December 2020 | HMRC becomes a secondary preferential creditor for VAT and for tax deducted from other people's pay, such as PAYE, employee National Insurance and CIS deductions. As a preferential creditor it ranks ahead of the floating charge holder for those debts, where the insolvency began on or after this date | Finance Act 2020 s98; IA 1986 s175(2)(b) |
| 22 June 2026 | Out-of-hours filing by fax removed. A charge holder appointing while the court is closed must email the notice of appointment, and the appointment runs from the time the email is sent | SI 2026/561; IR 2016 r3.20 |
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If your bank or lender holds a debenture over the company, check whether it counts as a qualifying floating charge before you plan your own appointment of an administrator. A charge holder can act faster than you can, and can end up choosing the administrator and the timing rather than you.
- Company administration
- CVL vs administration vs strike off
- Notice of intention to appoint template
- Letter to your bank or lender
- Check whether your company is insolvent
General information, not advice about your company.
Methodology and source
Every rule on this page was read from the current text of the Insolvency Act 1986, the Insolvency (England and Wales) Rules 2016 and the Companies Act 2006 on legislation.gov.uk on 23 September 2026. The dates in the chronology come from legislation.gov.uk's commencement notes and from the statutory instruments themselves, each linked in its row. Older rules are taken from the versions of the provisions as enacted or as they stood at the time. The table of which rules apply by charge date is our own summary of those provisions and is labelled as such. The receivership and administration counts are the Insolvency Service's monthly company insolvency statistics for England and Wales, updated here automatically when a new release is published. The page covers companies registered in England and Wales. Scotland has its own receivership rules and is not covered, and special administration regimes for regulated sectors are not covered either. This page is general information, not legal or insolvency advice.
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