Chargeholders

Chargeholders are entities that possess a financial claim or interest in an asset or a group of assets. This claim, known as a charge, is a security interest that grants the chargeholder the right to take possession of or sell the charged asset if the borrower defaults on their obligations. Charges are commonly used in secured lending arrangements.

There are two primary types of charges: fixed charges and floating charges. A fixed charge attaches to specific, identifiable assets, such as property or machinery. The borrower typically cannot deal with these assets without the consent of the chargeholder. A floating charge, on the other hand, covers a class of assets that may change in the ordinary course of business, such as stock or book debts. The charge "floats" over these assets until a specific event, such as default, causes it to crystallize and become a fixed charge over the assets then comprised within that class.

Chargeholders can include various financial institutions like banks, building societies, and other lenders. They can also be individuals or other companies. The terms of the charge are usually detailed in a legal document, such as a debenture or a mortgage. When a borrower fulfills their obligations, the charge is discharged. However, in cases of default, the chargeholder can enforce their security to recover the outstanding debt. The rights and powers of chargeholders are governed by relevant legislation and the terms of the charge agreement.