Companies Act, 1963

Circumstances in which floating charge is invalid.

288.—(1) Subject to subsection (2), where a company is being wound up, a floating charge on the undertaking or property of the company created within 12 months before the commencement of the winding up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the company at the time of or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of 5 per cent. per annum.

(2) In relation to a charge created more than 3 months before the operative date, subsection (1) shall have effect with the substitution for “12 months” of “3 months”.