Enforce security on a commercial loan
Every week you wait, there is less left to recover.Your borrower has stopped performing. Payments are late, a covenant has gone, or the business has visibly turned. What you do in the next few weeks decides most of what you get back. The asset pool is shrinking while you are being patient. Other creditors are moving, and the ones who registered and acted first will be paid first. We tell you what your documents actually let you do, issue the notices that hold up, and run the enforcement through to money in your account.
Notices that hold
Drafted to your own agreement, so the borrower has no procedural argument to run.
Movement in the first weeks
The recovery starts while there are still assets to recover from.
Run to the money
We stay on it through sale and distribution, not only to the demand letter.
What does enforcing a commercial loan involve?
When a borrower defaults, what a lender can do is set by two things: the loan agreement and the security held. The agreement says what counts as a default, what notice has to be given, and how long the borrower has to fix it. The security says what can actually be taken.
The options run from a formal default notice and a renegotiation, through accelerating the whole debt, to enforcing the security itself. Enforcement differs by asset. Real property usually means a mortgagee sale and often a court order. Personal property under a registered security interest can frequently be enforced faster and without one. Getting the process wrong at any of those points hands the borrower a procedural argument.
My borrower missed a payment. What now?
Start with the loan agreement, because it sets the notice you have to give and the time the borrower gets to fix things. Acting before those steps are complete usually gives the borrower a defence. We tell you what your facility requires and what the timing actually is.
What does enforcing security mean in practice?
Taking and selling the secured asset to recover what you are owed. How it works depends on the asset. Real property generally means a mortgagee sale and often a court order. Personal property under a registered security interest can often be enforced faster and without one.
Can I appoint a receiver?
If your security document gives you the right and the borrower has defaulted in a way that triggers it, yes. That is once the notice requirements are met. A receiver takes control of the secured assets and their proceeds for you. It is a serious step with its own obligations, so it is worth confirming the default is valid first.
What if the borrower goes insolvent?
Your position then depends almost entirely on whether you hold valid, registered security. A secured lender can generally still enforce against the secured assets. An unsecured lender ranks below them and often recovers little. This is why the registration you did at the start matters more than anything you do after the default.
The first few weeks after a default decide the rest
Send us the loan agreement and tell us what has gone wrong. We will tell you what you are entitled to do right now, and in what order.
Patience costs more than it looks like it does
Your borrower is not performing and you want to act. What you are not sure about is whether to issue a notice, renegotiate, or go straight to enforcement. Moving in the wrong order can hand the borrower grounds to delay you for months. Doing nothing while you decide is not neutral either, because the assets you would recover from are being spent.
- We will review your loan and security documents and tell you what you can do.
- We will prepare and issue the default and acceleration notices.
- We will advise whether to negotiate, accelerate or enforce.
- We will appoint and instruct a receiver or controller where the security allows.
- We will run the enforcement through to sale and distribution.
The calls have stopped being returned
You lent the money properly. There is an agreement, there is security, and it was registered. Now the payments are late, the borrower’s explanations have got vaguer, and the last two calls went unanswered. You do not want to be the lender who pulled the trigger too early on a business that would have recovered. You also do not want to be the one who waited politely while somebody else enforced first.
What's included in your loan enforcement service
- Review of your loan agreement and security documents.
- Advice on your options at each stage of the default.
- Default and acceleration notices drafted to your documents.
- Receiver or controller appointment and instruction.
- Mortgagee sale or personal property enforcement.
- Distribution of proceeds and final reconciliation.
What does waiting actually cost?
A business in trouble does not hold still while you decide how to feel about it. Stock gets sold, equipment gets traded, receivables get collected and spent. The directors start paying whichever creditor is loudest that week.
Meanwhile the other secured creditors are reading the same signals you are, and they are not all waiting. The lender who issues correct notices early is usually the one still holding a recoverable position six months later. There is a further trap in delay. Once a formal insolvency appointment is made, enforcement can be restricted for a period. The window you were holding open closes without your having chosen to close it. The chance to recover is largest right after the default, and smallest after months of informal conversations that went nowhere.
How we get the recovery moving
We read your loan agreement and your security first. What you are entitled to do is written there, rather than decided by how annoyed you are. You get a clear list. What counts as a default here, what notice it requires, what cure period applies, and what you can accelerate.
We then issue notices drafted to your document rather than from a precedent. A notice that does not match the agreement is the most common way an enforcement gets delayed. If enforcement is the right call we run it. The demand, the appointment of a receiver or controller where the security allows, the sale of the assets, and the distribution. The aim is the largest recovery in the shortest time, without leaving the borrower an argument to make.
How enforcement runs
Three steps from a missed payment to money back in your account.Read your rights
We go through the loan agreement and the security and tell you exactly what you are entitled to do, and when.
Serve the notices
We draft the default and acceleration notices to your own documents, so the borrower has nothing procedural to argue.
Enforce and recover
We run the enforcement through to the sale of the secured assets and the distribution of what it raises.
Your capital back, in the shortest time the law allows
Most lenders wait too long, and they wait for a decent reason. Enforcing feels like giving up on someone who said they would fix it, and quite often that person genuinely believed it. The difficulty is that the decision is not really between patience and aggression. It is between acting while there are assets, and acting after somebody else has.
We are ISO 9001 accredited. The notice requirements, the cure periods and the order of steps are set down rather than carried in somebody’s head. On a file where a mistimed notice restarts the clock, that is most of the value.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Act while there is still something to recover
Send us the loan agreement and the security, and tell us what the borrower has done. We will tell you what you can do today, what it requires, and what it is likely to return.
More on this area of law
Read more about commercial lending, default and enforcing security.