Pertains to the loan where the Borrower has pledged some asset as collateral for the loan, which then becomes secured debt.  The collateral is a secondary source of repayment if the Issuer/Borrower is unable to repay Investors/Lenders.  For secured debt to be adequately protected, a secured interest must be “attached” against the borrower and “perfected” against third parties for secured debt to be adequately protected.  Pertains to debt
and real estate investments.

A secured interest attaches against a borrower when a document is signed by the borrower specifically describing the collateral.

Perfection — A secured interest is “perfected” against third parties when such third parties are reasonably put on notice. While filing a  lien/financing statement is the safest way of perfecting a secured interest, other methods are also available.

A “Purchase Money Secured Interest” is a special form of secured debt that is secured by the specific assets financed by such secured debt and will, if properly perfected, have a “super-priority” in bankruptcy.  Pertains to real estate and debt.

« Back to Glossary Index