Floating Charge as Security in Debt Finance Transactions

The granting of security by the way of a floating charge is a common law concept which allows the entirety of a company’s assets to be used as collateral. Borrowers and lenders profit from this highly flexible means of providing a comprehensive security interest in debt finance transactions. This article examines whether the concept of floating charge is recognized under Swiss law or not. For this assessment the requirements for creating a right of pledge under Swiss law over different types of assets commonly used as security in debt finance transactions are analyzed, taking into account fundamental Swiss law principles governing the right of pledge and certain reform efforts. It concludes that only with respect to intermediated securities does Swiss law allow the creation of a security interest which is, to a certain extent, similar to a floating charge. In relation to the other assets which can be subject to a pledge, the concept of a floating charge contradicts fundamental Swiss…