Important Guidance on Whether IP Addresses are Caught by a Fixed or Floating Charge

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In the recent case of UKCloud Ltd, In the Matter Of (Re Insolvency Act 1986) [2024] EWHC 1259 (Ch), the High Court considers internet protocol (“IP”) addresses held by a cloud service provider (“UKCloud”) to be subject to a floating charge rather than a fixed charge as initially intended.

UKCloud had granted security to its Lender in February 2020 by way of a debenture to create fixed and floating charges over various assets. As part of its various assets, UKCloud held IP addresses valued at approximately £700,000.

The key issues in the case:

  1. The interpretation of the debenture’s language covering “licences, consents and authorisations”.
  2. Whether IP addresses constituted part of the company’s circulating capital.
  3. The extent of control exercised by the Lender over the charged assets.

Deputy ICC Judge Baister applied the two-stage test from Agnew v Commissioners of Inland Revenue [2001] to determine the nature of the charge. He concluded that while the natural meaning of the debenture’s language suggested an intention to create a fixed charge, the lack of evidence of actual control exercised by the Lender was crucial.

The “all or nothing” principle was also applied, meaning the charge had to be considered consistently for all assets it covered. Although the IP addresses did not neatly fit descriptions of circulating capital, as they were not regularly disposed of and replaced, the Judge found that UKCloud appeared able to carry on business without the Lender’s consent regarding these assets.

In conclusion, it was held that the charge over the IP addresses was floating rather than fixed.


  1. Lenders must demonstrate actual control over charged assets to support fixed charge claims.
  2. Courts may consider post-contractual conduct in determining if control provisions are a “sham” in practice.
  3. The “all or nothing” approach to interpreting charging clauses remains influential.
  4. Creating fixed charges over intangible digital assets like IP addresses presents unique challenges that require careful consideration in drafting and implementing security arrangements.

This case provides useful guidance on securing lending against modern digital assets and highlights the importance of lenders actively monitoring and exercising control over charged assets to maintain the intended security status.

This article is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this article may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.