What distinguishes a floating charge?

A floating charge is a type of security interest that allows a borrower to use or sell assets in the normal course of business until a specified event occurs, which causes the charge to "crystallize" into a fixed charge. This means that while the charge is floating, the borrower retains the ability to deal with the assets, including selling them, without restriction.

The distinguishing characteristic is that the floating charge remains flexible and does not restrict the borrower's freedom to manage their assets until an event of default occurs or the charge is otherwise triggered. At that point, it becomes a fixed charge on the specific assets identified, making it easier for creditors to enforce their rights against those assets.

In contrast, a fixed charge is tied to specific assets and does not allow for the sale or transfer of those assets without the lender's consent. The other options provided do not accurately describe the nature of a floating charge, as it is not a guarantee to all creditors, nor is it automatically registered with the government in the way other security interests might be. The critical function of a floating charge lies in the flexibility it provides until it crystallizes, restricting the borrower's rights.