When the floating security becomes enforceable (art. 328 LGS)
Article 328 of the General Companies Law lists the cases in which the floating security becomes enforceable: failure to pay, loss of a quarter of the assets, dissolution or bankruptcy, or cessation of business.
What article 328
Article 328 sets out the cases of enforceability of the floating security.
The floating security is enforceable if the company: 1) fails to pay the interest or amortizations within the agreed terms; 2) loses one-quarter (1/4) or more of the assets existing on the date of the issue contract; 3) enters into voluntary or forced dissolution or bankruptcy; 4) ceases the conduct of its business.
Source: Law 19,550, art. 328 — InfoLEG (updated official text)
Commentary
The security 'floats' until a serious event makes it fall upon the assets: default, serious deterioration of the assets, dissolution/bankruptcy or cessation of activity. At that point the debenture holder may take action against the charged assets.
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