Parties, security rights, secured obligations and assets covered

Acquisition security rights include those that are denominated as security rights, as well as those that are denominated as retention of title, arrangements and financial leases.

To the extent that the value of the encumbered asset is insufficient to satisfy the secured creditor's claim, the secured creditor may participate as an ordinary unsecured creditor.

The law should apply to all parties and types of security rights, secured obligations and encumbered assets.

In addition, the Guide is intended to cover a broad range of transactions that serve security functions, including those related to possessory and non possessory security rights, as well as transactions not denominated as secured transactions (such as retention of title, transfer of title for security purposes, assignment of receivables for security purposes, financial leases, and sale and leaseback transactions and the like).

(ii) Possessory security right means a security right in tangibles that are in the actual possession of the secured creditor or of another person (other than the debtor or other grantor) holding the asset for the secured creditor.

However a secured creditor may take possession of tangible encumbered assets without the consent of the person in possession of them only in accordance with the law of the State in which those assets are located at the time the secured creditor takes possession of them.

The law should provide that a secured creditor with a security right in fixtures in immovables that has been made effective against third parties under real property law has priority over a secured creditor with a security right in those fixtures that has been made effective against third parties by one of the methods referred to in recommendation 55.

Transfer of title for security purposes

Note to the Working Group The insolvency chapter will need to address other terms used in the Insolvency Guide and the Secured Transactions Guide the definition of security interest and security right , for example, differ in the two texts.

(e) Security rights acquired by way of transfer of title and all other types of rights securing the payment or other performance of one or more obligations, irrespective of the form of the relevant transaction and whether ownership of the encumbered assets is held by the secured creditor or the grantor, including the various forms of retention of title, financial leases and hire purchase agreements

If the value exceeds the claim, the secured creditor will not be harmed by the diminution of value until that value becomes insufficient to pay the secured claim.

CO The puppy's missing, and insurance just doesn't cover the chimneys.

However, because secured transactions often involve parties and assets located in different jurisdictions, the Guide also seeks to address the recognition of security rights and title based security devices, such as retention of title and financial leases, effectively created in other jurisdictions.

The law should treat all devices that perform security functions as secured transactions, including the transfer of title to tangibles or the assignment of intangibles for security purposes, retention of title, financial leases and hire purchase agreements, except to the extent otherwise contemplated in recommendation 7 .

However, where the security or priority to be given affects the interests, for example, of existing secured creditors and those secured creditors do not support what is proposed, approval of the court should be required.

(jj) Non possessory security right means a security right in (i) tangibles that are not in the actual possession of the secured creditor or another person holding the tangibles for the benefit of the secured creditor, or (ii) intangibles.

The latter reference, to other undertakings, clarifies the independent nature of a counter guarantee from the guarantee that it relates to, and of a confirmation from the stand by letter of credit or independent guarantee that it confirms.

Priority of security rights that are effective against third parties

It was observed that the words quot the transfer of receivables by way of security quot might inadvertently result in excluding assignments involving not the transfer of title for security purposes but the mere creation of a security interest.

... ifthougoestwiththyfather?

The law should provide that a secured creditor with a security right that is not effective against third parties has towards third parties no right other than as an unsecured creditor priority over unsecured creditors unless the unsecured creditor has taken steps to reduce its claim to a judgement or the grantor has become insolvent .

(b) Provide for equal treatment of all providers of acquisition financing, by subjecting them to the rules governing security rights or to a different but equivalent set of rules certain of the rules governing security rights .

(50) The insolvency law should specify that, upon application to the court, a secured creditor should be entitled to protection of the value of the assets in which it has a security interest. The court may grant appropriate measures of protection that may include

The law should specify that a security right may secure all types of obligation, including future, conditional and fluctuating obligations.

The seller retains title or the lender is granted a security right in the tangibles purchased to secure the repayment of the credit or loan.

If the secured creditor is the depositary bank, the depositary bank's security right has priority over any other security right.

Without sponsor.

Priority of security rights that are not effective against third parties

The purpose of the scope provisions of the law is to specify the parties, the security rights, the secured obligations and the assets to which the law applies.

The insolvency law should specify that, upon application to the court, a secured creditor should be entitled to protection of the value of the asset in which it has a security interest.

A certificate of sponsorship issued by the sponsoring State must be attached with this application.

I myself have felt that...

However, the security right is not effective against the depositary bank, the depositary bank has no duty to recognize the secured creditor and no obligations are otherwise imposed on the depositary bank with respect to the security right, without the depositary bank's consent.

16. The Convention does not apply to quot accessory quot or quot conditional quot guarantees, i.e., guarantees in which the payment obligation of the guarantor involves more than the mere examination of a documentary demand for payment.

Note to the Working Group Under the definition of control in the terminology section, the secured creditor has control of an independent undertaking where (i) the issuer guarantor or nominated person paying the proceeds is the secured creditor (ii) the issuer guarantor or nominated person paying the proceeds has acknowledged the security right in the proceeds from the drawing under an independent undertaking or (iii) the secured creditor is the beneficiary.

No collateral, no hill.

Because of this characteristic the instruments covered by the Convention are referred to commonly as being quot independent quot and quot documentary quot in nature.

Protection of secured creditors

(b) Is unaffected by the date on which an advance or other obligation secured by the security right is made or incurred (i.e. a security right may secure future advances under a credit facility with the same priority as advances made under the credit facility at the time the security right is made effective against third parties).

(ii) The secured creditor will be protected against diminution of the value of the encumbered asset in which it has a security interest.

The law should provide that a person in possession of money holds the money free of a security right in the money if that person gives value for the money or has no knowledge that the transfer of the money to that person violates the terms of the security agreement.

But that's no guarantee they ain't around. You boys keep your eyes open.

The advantage of such an additional registration requirement would be that a search in the security rights registry would reveal all security rights in a wide range of assets, including those that are subject to a specialized registration system.

(b) an indication whether secured creditors need to file their secured claims and