Circulating security interests (the PPSA equivalent of floating charges over personal property) attach immediately to after-acquired property under the PPSA¹. This is despite the grantor retaining an ability to dispose of circulating assets (the equivalent of floating charge assets) in the ordinary course of the grantor’s business, which means there is no appropriation of circulating assets to the security interest.

A secured party under a circulating security interest has an immediately attached security interest in circulating assets. This should assist circulating secured parties in priority contests with others concerning collateral that has been disposed of in unauthorised ways (for instance, outside the ordinary course of business).

Outside the PPSA, under floating charge law, the dominant view appears to be that a floating chargee has no equitable proprietary interest in floating charge property before the charge crystallises. This is because floating charge property can be disposed of freely in the chargor’s business within the scope of the trading power permitted to the chargor by the floating chargee (usually the ordinary course of business). Floating charge property is not appropriated to the assignment by way of charge – on this view, appropriation is required to recognise an assignment (outright, or by way of charge or security). See Chapter 28 (Circulating security interests (floating charges)) for discussion.