Where a creditor is financing the inventories of a manufacturer of life preservers, the most sensible security for all involved is a floating charge.

Floating Charge

A debt security issued by a corporation in which assets of the corporation, such as stock-in-trade, are pledged as security. Until such time as default occurs, the corporation is free to dispose of the assets.

Creditor

An entity or person to whom money is owed by a debtor.

Inventories

The total amount of goods and materials held by a company for the purpose of sale or production.