Floating Lien

Floating Lien
A legal claim placed on a set of assets rather than on a single asset. A floating lien is used when the smaller components of the general asset can change over time, such as in the case of the outstanding balances in a company's accounts receivable. A bank making a loan secured by a floating lien will have an interest in the set of company assets when the lien is placed, as well as additions to that asset set over time.

An example of this type of legal claim would be a floating lien placed on a company's inventory. Over time the amount of inventory may increase, and the floating lien is designed to cover the additional acquisitions. If the company goes into default, the value of the floating lien becomes a fixed charge, which gives the lender priority as a creditor.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • floating lien — see lien Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. floating lien …   Law dictionary

  • Floating lien — General lien against a company s assets or against a particular class of assets. The New York Times Financial Glossary …   Financial and business terms

  • floating lien — The name for and the nature of a creditor s interest in a debtor s accounts receivable and inventory. In the natural operation of any business, the specific receivables and inventory owned at one point in time are replaced over time by new… …   Financial and business terms

  • floating lien — (Finance) general attachment against the assets of a company or against a specific type of assets …   English contemporary dictionary

  • floating lien — A security interest retained in collateral even when the collateral changes in character, classification, or location. An inventory loan in which the lender receives a security interest or general claim on all of a company s inventory. Security… …   Black's law dictionary

  • floating lien — A security interest retained in collateral even when the collateral changes in character, classification, or location. An inventory loan in which the lender receives a security interest or general claim on all of a company s inventory. Security… …   Black's law dictionary

  • LIEN — (Heb. שִׁעְבּוּד נְכָסִים, Shibud Nekhasim). The Concept Jewish law enables the creditor to exercise a lien over all the debtor s property, in addition to his remedies against the debtor personally. This lien automatically comes into existence on …   Encyclopedia of Judaism

  • Floating charge — A floating charge is a security interest over a fund of changing assets of a company or a limited liability partnership (LLP), which floats or hovers until conversion into a fixed charge, at which point the charge attaches to specific assets. The …   Wikipedia

  • Lien — For other uses, see Lien (disambiguation). Property law …   Wikipedia

  • lien — /liy(a)n/ A claim, encumbrance, or charge on property for payment of some debt, obligation or duty. Sullins v. Sullins, 65 Wash.2d 283, 396 P.2d 886, 888. Qualified right of property which a creditor has in or over specific property of his debtor …   Black's law dictionary

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