Singapore legislation
Clause 229
Clause 229
Avoidance of certain floating charges
(1)
A floating charge on the company’s property created at a relevant time is invalid except to the extent of the aggregate of —
the value of so much of the consideration for the creation of the charge as consists of money paid, or goods or services supplied, to the company at the same time as, or after, the creation of the charge;
the value of so much of that consideration as consists of the discharge or reduction, at the same time as, or after, the creation of the charge, of any debt of the company; and
the amount of such interest (if any) as is payable on the amount falling within paragraph (a) or (b) pursuant to any agreement under which the money was so paid, the goods or services were so supplied or the debt was so discharged or reduced.
(2)
Subject to subsections (3) and (5), the time at which a floating charge is created by a company is a relevant time for the purposes of this section if the charge is created —
in the case of a charge which is created in favour of a person who is connected with the company, at a time within the period of 2 years ending on the commencement of the judicial management or winding up, as the case may be;
in the case of a charge which is created in favour of any other person, at a time within the period of one year ending on the commencement of the judicial management or winding up, as the case may be; or
at a time within the period starting on the commencement of the judicial management of the company and ending on the date the company enters judicial management.
(3)
Where a company creates a floating charge at a time mentioned in subsection (2)(b) and the person in whose favour the charge is created is not connected with the company, that time is not a relevant time for the purposes of this section unless the company —
is at that time unable to pay its debts within the meaning of section 125(2); or
becomes unable to pay its debts within the meaning of section 125(2) in consequence of the transaction under which the charge is created.
(4)
For the purposes of subsection (1)(a), the value of any goods or services supplied by way of consideration for a floating charge is the amount in money which at the time they were supplied could reasonably have been expected to be obtained for supplying the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were supplied to the company.
(5)
Where any period mentioned in subsection (6) in respect of a company coincides with any period mentioned in subsection (2)(a), (b) or (c) in respect of that company, the time at which a floating charge is created by that company is a relevant time if the floating charge is created during the period immediately before that period mentioned in subsection (2)(a), (b) or (c) (as the case may be) that is equal to the sum of all such periods mentioned in subsection (6) coinciding with the period mentioned in subsection (2)(a), (b) or (c), as the case may be.
(6)
The periods mentioned in subsection (5) are any of the following:
the automatic moratorium period mentioned in section 64(8);
the period during which an order under section 64(1)(a) is in force in relation to the company, including any extension of that period under section 64(7);
the period during which an order under section 65(1)(a) is in force in relation to the company, including any extension of that period under section 65(5);
the period during which an order under section 210(10) of the Companies Act is in force in relation to the company.