When a borrower defaults in servicing or re-paying a loan then the obvious preferable option is to work out a solution that doesn’t involve the lender taking action to enforce his security. In the current market “workouts” are being devoted more time and given preference rather than enforcement. Although it’s preferable to negotiate yet both the lender and borrower should be acquainted with the different methods of enforcement and should be aware of obstacles, if any, in the lender’s path which might delay or prevent enforcement. The positions of creditors with competing interests, e.g. landlords, should also be kept in mind.
Issue of enforcement of securities can come up in situations ranging from the administration of a large retailer, e.g. Woolworths, to mortgage possession proceedings of someone’s home. Some of the common methods of enforcement of securities are the appointment of administrators and receivers, and the sale and possession of a secured property.
A lender suffering a shortfall between the amount of the debt and the amount realised for the secured property often considers if he has any collateral claims, including professional negligence claims against the solicitors and valuers who were engaged in relation to taking the security.
We have the expertise to advise lenders (and other creditors) as well as borrowers on breaches, remedies, workouts and restructuring.