Designing A Solid Security Package: General Principles For Taking Security (Video)

Transcript

My name is Stephanie Harvey and I am a corporate/commercial lending lawyer with Gowling WLG. You are watching video two of our 'Types of Security' video series.

You will recall that a lender takes security in order to have some recourse to seize and sell the borrower's assets if the borrower defaults in the repayment of a loan, or the performance of its other covenants.

Although there are a number of general principles a lender needs to keep in mind when it comes to taking security, let's focus on three main points:

• Ownership of Asset
• Aligning the Security to the Assets
• Identifying Other Interests in the Borrower's Collateral

Ownership of the asset may seem very obvious, but it is not uncommon for a borrower to hold assets, such as machinery, shares or real property as available to support its financing, but the borrower may have forgotten to tell the lender that for tax purposes or for other corporate reasons, a particular