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ARTICLE · 11 NOVEMBER 2008

Good News For Secured Creditors As Value Of Their Collateral Increases

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For most lenders, taking security from their borrowers is pretty straightforward: take a general security agreement covering inventory, receivables and all other collateral, add some guarantees, and then look to see if there are any other loose ends that need tying up.

CanadaFinance and Banking
Lydia Salvi
Lydia Salvi
Amanda Plastina
Amanda Plastina
Alex Tarantino
Alex Tarantino
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For most lenders, taking security from their borrowers is pretty straightforward: take a general security agreement covering inventory, receivables and all other collateral, add some guarantees, and then look to see if there are any other loose ends that need tying up. But for businesses in regulated industries where some sort of government-issued licence is a threshold requirement, it's not that easy.

"A commercial fisher with a ramshackle boat and a licence to fish is much better off financially than a fisher with a great boat tied up at the wharf with no licence." Indeed, within these regulated businesses, the licence or quota is recognized as having the most value. It is, therefore, the logical single type of collateral for a borrower in such a business to offer as security.

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