Assignment Of Charter

What is it and what does it do?

An assignment of charter is a security agreement whereby a party (typically, a vessel owner) that has entered into a charter assigns its rights under such charter to a secured party (typically, the vessel's mortgagee). Assignments of charters are typically given by a vessel owner for long term charters when the vessel subject to the charter is also subject to a mortgage in favor of the secured party. The intent of a charter assignment is to give the secured party the ability to step into the owner's place under the charter following an event of default under the relevant debt agreement. If a mortgagee seeks to enforce its mortgage following such event of default by taking possession of the vessel or selling the vessel, the benefit of a charter assignment is that the mortgagee can step into the charter that the owner has with a counterparty, and continue to allow the vessel to earn under the charter, either under the mortgagee's or new