What is springing collateral?

Springing Collateral means any assets other than Initial Collateral and Additional Collateral of the Company or any of its Restricted Subsidiaries that are affirmatively pledged pursuant to the Credit Agreement as collateral for Indebtedness of the Company or a Subsidiary Guarantor incurred under the Credit Agreement …

What is a springing security interest?

Upon the occurrence of an Event of Default, Lender’s security interest in the Account shall immediately become effective. Upon the occurrence of an Event of Default, all Lender’s rights and remedies under this Agreement shall immediately be enforceable.

What is the difference between lien and collateral?

You grant the lender a security interest in your property, and it means they have a lien. The lien secures the loan, so that if you don’t pay, the lender can take the property. The property you pledge to secure a loan is called collateral.

Can a lien be used as collateral?

A lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt. A lien could be established by a creditor or a legal judgement. A lien serves to guarantee an underlying obligation, such as the repayment of a loan.

What is a springing recourse event?

In springing recourse or springing liability, when such adverse events occur, the borrower’s guarantor (i.e. principal) becomes partially or fully liable for the loan obligation regardless of whether the loan is non-recourse or not.

How does a DACA account work?

In a DACA, a borrower grants a lender a security interest in their specific account with a bank. The lender has the ability to control the flow of funds from the account to the borrower, freeze them if necessary, and to give their own instructions.

Why would you file a UCC 1?

The UCC-1 Financing Statement is filed to protect a lender’s or creditor’s security interest by giving public notice that there is a right to take possession of and sell certain assets for repayment of a specific debt with a certain debtor.

What is the risk of a deposit account control agreement?

A depository institution that enters into a DACA is incurring significant obligations to both the secured party and its depositor customer. Failure by a depository institution to fulfill its obligations can diminish the value of the lender’s deposit account collateral.

What are collateral liens?

More Definitions of Collateral Lien Collateral Lien means any security interest in, mortgage lien on, pledge of or other grant of any right in or to any property of any Person granted in favor of the Collateral Agent or any of the Secured Parties as security for any of the Obligations.

What are the different types of liens?

There are three common types of liens: statutory, consensual, and judgment.

Are springing guarantees enforceable?

A springing guaranty is a guaranty that becomes effective upon the occurrence of a certain condition, e.g., a bankruptcy filing. Despite several commentators’ view that springing guaranties should not be enforceable, courts have been willing to enforce such provisions against both borrowers and guarantors.