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SECURED TRANSACTIONS AND ASSET ACQUISITIONS

We Know Bankruptcy Law

In the financial world, one business’s crisis is another business’s opportunity. Our team of experienced professionals can help identify and provide guidance for both the challenges and opportunities in pursuing the acquisition or sale of assets from financially-distressed companies. Whether by sale from a secured creditor under Article 9 of the Uniform Commercial Code, a sale by a court-appointed receiver for the benefit of creditors, or sale by a debtor-in-possession or bankruptcy trustee under Section 363 of the Bankruptcy Code, the attorneys at Lovein Ribman will provide exceptional service in the full spectrum of insolvency-related disputes and secured transactions.

Secured Transactions

A secured transaction is a transaction in which a creditor extends credit or provides other value and in exchange receives a security interest in property owned by the debtor or in which the debtor has rights, to secure repayment of the debt. A secured transaction can cover real property, personal property, intangibles, or fixtures. It is important to note that the laws governing real property are vastly different to those that govern security interests in personal property and fixtures.

Security Agreements

A security agreement grants a party—typically the lender—a security interest in the borrower’s collateral to secure repayment of the debt in the event the debtor defaults on the underlying promissory note. Secured transactions are an integral part of the business world, both inside and outside of bankruptcy. When the economy is doing well, companies less averse to risk, are willing to take greater chances with their capital by making loans and investments that they might otherwise avoid in a bearish economy. In doing so, one of the most important things that a lender will look at is not only the borrower’s ability to repay, but their collateral. If you are a lender, it is critical to have assurances that, in the event the money you are lending is not paid back, you still have adequate protection and recourse against the borrower in the event of default or insolvency.

Financing Statements

A financing statement is a document used to “perfect” a secured party’s rights in the debtor’s collateral. Typically, after a security agreement is executed by a debtor, a security interest “attaches” to the property, but depending on the nature of the collateral, may not be perfected until a financing statement is filed or some other required action is taken. A financing statement, when filed, provides notice to the world of the secured party’s security interest in the debtor’s assets.

Collateral

Collateral is the property that is subject to a security interest. Collateral is classified into several different categories and subcategories depending on the nature of the property. Classification of collateral is important because it determines what is required to “perfect” a security interest, as well as the priority of conflicting claims and the secured party’s rights in the event of a default. Additionally, the classification of collateral may also depend on how it is used by the debtor.

Why are Secured Transactions Important?

At the heart of nearly every secured transaction is a security agreement and promissory note. The promissory note is a contract between a lender and borrower wherein the borrower agrees to repay the loan in accordance with the terms of the contract. In the event of a default, the lender can pursue claims against the borrower for the deficiency. However, what happens when the borrower is “judgment proof” or does not have assets to satisfy a personal judgment? Or even worse, files bankruptcy? This is where a security agreement comes in and is vital to sustaining your claims.

When recessions hit and borrowers default on their obligations, unsecured creditors are in a race to obtain a judgment. The first judgment creditor to attach the debtor’s assets will have priority over later judgment creditors. A secured creditor, on the other hand, need not worry about obtaining a judgment because it already has a prioritized security interest in the secured property. Even if a debtor files bankruptcy, a secured creditor is protected by its security interest in the debtor’s collateral, while an unsecured creditor risks being paid nothing—even if they have obtained a judgment for their claim. When a borrower defaults or you discover that they may be or have already become insolvent, you do not want to be left holding the bag, but can rest assured that no matter what happens, your investment has been secured.

IF YOU ARE IN NEED OF REPRESENTATION WITH RESPECT TO A SECURED TRANSACTION OR ACQUISITION INVOLVING A SECURITY INTEREST IN COLLATERAL, PLEASE CONTACT US BY SUBMITTING THE CONTACT FORM OR BY CALLING (888) 368-2483 FOR A NO OBLIGATION CONSULTATION.

TEXAS BANKRUPTCY ATTORNEYS

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“Lovein Ribman is an exceptional firm and quite literally one of the finest we have ever worked with. Mr. Lovein has represented us over the years on a number of matters and has always been extremely effective at accomplishing our objectives in a prompt and efficient manner. Attorney Lovein is extremely knowledgeable and packs a mighty punch, often reaching into large corporations to turn levers thereby ensuring their smaller vendors are treated fairly and equitably.”  – Miami Filters, LLC

“We have worked with many law firms all over the United States since we are a multi-state contractor. This firm is one of the best. They are very professional and well versed in the law and yet make you feel like they are part of your everyday management team! I highly recommend Lovein Ribman!”  – Premier Site Services, LLC

“I cannot say enough about the attorneys at Lovein Ribman, who for well over a decade have consistently provided our company with immediate access and response, wise and thorough legal advice, guidance and representation through some of our most challenging of times.  Thank you for always being there for us.”  – K. Simon Construction
“Lovein Ribman is amazing! We’ve worked with them as needed for a few years now. Whether it’s a big issue or small, they always give us prompt attention and excellent assistance in resolving any issue. I would highly recommend them to anyone in the construction industry!”  – Mak Studio
“Robert Lovein and the entire Lovein Ribman team are great attorneys and a real asset to our company. I have consulted with them on countless projects over the past 12 years and they have always been great to work with. They are my go-to group for all legal-related matters.”  – CODY Air Conditioning & Heating
“This firm is very professional and timely. We have been working with them for 13+ years and will continue to do so. Couldn’t recommend a better team of lawyers to work with. They are on your side!”  – RECS
“Lovein Ribman has handled our Construction Legal business for 6 years and no one is better. Very professional and they know the law very well.”  – ASI
“Lovein Ribman has represented our company for over a decade. They have handled all of our matters with utmost professionalism and timeliness. I don’t make recommendations easily, but would recommend this firm without hesitation. I would consider Lovein Ribman as some of my top business advisers.”  – Cheyenne Construction
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