Distinguishing between fixed and floating charges is a much-discussed topic, and, in my view, both conceptually impossible and commercially pointless.

I argue this point in the October 2024 edition of Butterworths Journal of International Banking and Financial Law, but in summary:

• Floating charges were the Chancery court’s elegant solution in the 1870s to the problem of debentureholders lending to businesses wanting security over all of the present and future assets of a company, including those disposed of in the ordinary course of its business. The floating charge included an implied term to dispose of assets and use their proceeds until the debentureholders enforced the charge.
• The Preferential Payments in Bankruptcy Amendment Act 1897 quickly followed giving preferential creditors priority over the claims of holders of debentures and debenture stock under a floating charge.  Current legislation has extended considerably beyond this and gives preferential creditors priority over all floating charges – not just debentures, as do other statutory provisions impinging on floating charges – such as the prescribed part and the administrator’s power to use floating charge assets.
• This makes the fixed and floating charge distinction important but very few charges give an unfettered authority to dispose of charged assets and use their proceeds, or give the chargor no authority whatsoever, there is invariably some authority depending on the commercial circumstances, which means that the test cannot be absolute.  How much control must the charge have over the charged assets before the charge will be characterised as fixed? There can be no logical answer to that question.  It is all a question of degree. 
• There is no sensible commercial reason to treat a charge over a specific asset differently merely because the chargor is – or is not – entitled to use the proceeds before enforcement.  
• The distinction arises from insolvency law and the need for certain unsecured liabilities of a company to be paid out of certain charged assets, therefore a reform of insolvency law is needed.  This requires a consideration of which unsecured liabilities should be met - a matter of policy - and from which secured assets.
• It is suggested that the initial concern for statutory intervention for preferential creditors was to prevent debentureholders sweeping off everything, and we should return to that principle which we now call qualifying floating charges.  We could then create security over specific assets without the need for artificial structures to try to avoid the floating charge problem. Debentureholders would be at a disadvantage, but this could be factored into the lending decision, and there are significant advantages to being able to appoint an administrator as a qualifying charge holder.  Alternatively, the levy could be limited to current assets but this would require a clear definition of current assets.
• Certainty and commercial sense need to prevail.