A blanket lien is a security interest in all of a debtor’s assets that secures any and all obligations the debtor owes to the secured party. A blanket lien gives the secured party the right to seize and sell any of the debtor’s assets to satisfy the debt. This type of lien is often used … Read more
What is a debtor? A debtor is an individual who owes a debt to another party. A debtor is different from a creditor, who is an individual to whom a debt is owed. What is the difference between debt and debtor? Debt is an obligation that must be repaid, while a debtor is the person … Read more
An Equipment Trust Certificate (ETC) is a type of corporate debt security that is typically issued by a lessor in order to finance the purchase of equipment, such as aircraft, vehicles, or machinery. The equipment is used as collateral for the loan. ETCs are also known as equipment financing trust certificates and equipment loan trust … Read more
Rollover risk is the risk that a company will not be able to refinance its debt when it becomes due. This can happen for a number of reasons, including a change in the company’s credit rating, an increase in interest rates, or a decrease in the availability of credit. If a company is unable to … Read more
Bankruptcy risk is the risk that a company will be unable to repay its debts and will be forced to declare bankruptcy. This risk is highest for companies with high levels of debt and/or interest payments, and for companies in industries with high levels of competition. What are the two kinds of bankruptcy? There are … Read more
Agency costs of debt are the costs associated with the conflict of interest between stockholders and bondholders. The conflict arises because stockholders can benefit from taking risks that may not be in the best interests of bondholders. For example, stockholders may want the company to invest in risky projects in order to increase the value … Read more
A receivership is a legal status assigned to a company when it is unable to pay its debts. A receiver is appointed to take control of the company’s assets and distribute them among the creditors. The receiver is typically a court-appointed individual, but in some cases, the creditors may appoint the receiver. The purpose of … Read more
Call money refers to short-term loans that are typically used by businesses to cover operational expenses. The loans are typically repaid within a few days or weeks, and the interest rates are generally higher than those for longer-term loans. Call money is typically used by businesses that have cash flow issues or need to cover … Read more
. Unitranche Debt: A Loan That Combines Funding From Multiple Parties What is an agreement among lenders? An agreement among lenders is a formal, written agreement that outlines the terms and conditions of a loan. This agreement is between the borrower and the lender, and it is signed by both parties. The agreement will detail … Read more
A liquidation preference is a feature of some corporate debt instruments that gives the holder of the debt instrument priority over other creditors in the event of a liquidation of the company. In the event of a liquidation, the holders of the debt instrument with a liquidation preference will be paid out before other creditors, … Read more
