Enforcing Share Mortgages In The “New Old Fashioned Way”

Because of levels of economic turmoil not seen for nearly a century, some secured creditors have been taking a slightly fresh approach in relation to realisation of their security in the event of a default. One of the common features of secured financing concerning offshore vehicles involves taking a share mortgage over the shares issued by the offshore entity, which allows the secured party to take indirect control of any assets held by the entity. In normal times, the usual way to enforce such security would be to appoint a receiver who would vote the shares and put a new board of directors in who would then monetise the underlying assets and utilise them to pay the secured debt.