Enforce security on a commercial loan facility/agreement
We will help you manage a troubled loan and enforce your security when a borrower fails to perform.
A borrower who misses a payment or breaches a loan covenant is sending a signal, how a lender responds in those first weeks often determines whether they recover their money or write it off.
Acting too slowly allows the borrower’s financial position to deteriorate further and the pool of assets available for recovery to shrink. Acting without the right advice can trigger procedural defences that complicate the enforcement. We work with commercial lenders to manage distressed loan facilities, issue the required notices, and enforce security interests quickly and correctly.
What does managing and enforcing a commercial loan facility involve?
When a borrower fails to perform under a commercial loan, whether by missing payments, breaching financial covenants, or allowing the business to deteriorate, the lender has a range of options depending on what the loan agreement says and what security is held. Managing the facility may involve issuing formal notices, negotiating revised terms, or accelerating the debt. Enforcing security may involve appointing a receiver or mortgagee, taking possession of secured assets, or other formal steps. The correct process depends on the nature of the security and the terms of the facility, mistakes in the enforcement process can create procedural defences for the borrower.
What can I do if my borrower misses a payment?
What does it mean to enforce a security interest?
Enforcing a security interest means exercising the lender’s rights to take and sell the secured asset to recover the outstanding debt. The process differs depending on whether the security is over real property (a mortgage) or personal property (a registered security interest). For real property, the lender typically needs a court order before selling. For personal property security, enforcement can often proceed more quickly without a court order, depending on the terms of the security document.
Can I appoint a receiver if the borrower defaults?
If your security agreement includes a right to appoint a receiver or controller, and the borrower has defaulted in a way that entitles you to exercise that right, then yes (subject to correct notice procedures). A receiver takes control of the secured assets and their proceeds on behalf of the lender. Appointment of a receiver is a significant step with significant legal implications, and it should only be taken after proper legal advice on whether the default is valid, whether the appointment is properly made, and what the receiver’s obligations will be.
What happens to my loan if the borrower goes into insolvency?
If a borrower becomes insolvent, the lender’s ability to enforce depends primarily on whether it holds a valid, registered security interest. A lender with properly registered security can generally enforce against the secured assets even in an insolvency. Unsecured lenders rank well below secured creditors in the distribution waterfall and often receive little or nothing. The quality of your security position at the point of insolvency is the key determinant of your recovery.
Early intervention before the position deteriorates.
Notices that withstand challenge.
Enforcement that completes without procedural delay.
A borrower in default requires a measured, fast, and technically correct response.
The steps you take in the first weeks after a borrower defaults are the ones that determine whether you can recover your money, or spend the next year fighting procedural objections.
Every week of inaction is another week of erosion in your recovery position.
Your borrower is not performing. Payments are late, covenants have been breached, or the business is clearly struggling. You want to act, but you are not sure whether to issue formal notices, negotiate an amendment, or start enforcement. And you know that moving in the wrong sequence could give the borrower grounds to delay or resist your recovery attempts.
- We will review your loan documentation and advise on the options available.
- We will prepare and issue the required default and enforcement notices.
- We will advise on whether to negotiate, accelerate, or enforce security.
- We will manage the enforcement process from notice to completion.
Your capital is at risk.
You made a commercial loan, took security, and documented the arrangement properly. But the borrower is now missing payments, the business appears to be deteriorating, and your calls are not being returned. You know you have options, but you are not certain of the correct sequence of steps to take or whether the moment has come to move from patience to enforcement. The longer you wait, the less there will be to recover.
What's included in your loan management and enforcement service
- Review of existing loan and security documentation.
- Advice on available options at each stage of default.
- Preparation of formal default and enforcement notices.
- Receiver or controller appointment advice and management.
- Mortgagee sale or security enforcement coordination.
- Ongoing advice throughout the enforcement process.
What happens when lenders delay enforcement?
Commercial lenders who hesitate when a borrower first defaults routinely find that the pool of assets available for recovery has diminished by the time they finally act. A business in financial distress does not stand still. Other creditors are also moving, the borrower may be preferring some creditors over others, and assets that were available six months ago may have been sold, encumbered, or consumed.
A lender who waits too long before issuing the correct notices may also find that their right to enforce has been complicated by a subsequent formal insolvency appointment, which in some circumstances restricts enforcement action for a period. The opportunity to recover is almost always greatest at the earliest point after default — and smallest after months of informal negotiations that go nowhere.
Here is how we get your recovery on track from the first call.
We start by reviewing your loan agreement and security documentation to confirm what your rights are, what notices you need to issue, and in what order. We then move quickly to issue notices drafted precisely to comply with your loan agreement and withstand any procedural challenge from the borrower.
If enforcement is the right path, we manage every step: from the formal demand to the appointment of a receiver or mortgagee, through to the realisation of secured assets and distribution of proceeds. Our goal is to put the maximum amount back in your hands in the shortest time possible, while protecting your legal position at every stage.
We move quickly, accurately, and with full knowledge of your rights.
Assess your position.
We review your loan documentation, security interests, and the nature of the default, then advise on the options available and the most effective path to recovery.
Issue the right notices.
We prepare and issue every required notice in the correct form and sequence so your enforcement rights are preserved and the borrower has no procedural basis to delay.
Enforce and recover.
We manage the enforcement process to completion until your capital is recovered.
Commercial finance lawyers who have managed enforcement from first default to final distribution.
We have seen what happens when lenders wait too long, issue the wrong notices, or move to enforcement without adequate preparation. Our team has managed enforcement action across a wide range of security types and borrower circumstances, from single-asset enforcement to complex business receiverships involving multiple creditors.
We know the steps that must be followed precisely, and we know how to move quickly without creating procedural problems that a resourceful borrower will use against you. When you come to us with a defaulting borrower, our first question is: what do you need to do right now to protect your position?
We understand you want to know the cost, before we get started.
We will map out our process, from beginning to end, so you know what the journey will look like before you get started.
We will provide you with a clear and detailed Work Proposal covering each step along the way.
Our fair fees are all-inclusive. No hidden costs for telephone calls, emails, photocopying, couriers, or coffee.
Our great lawyer guarantee
We want to be part of your team over the long term. We achieve this by adhering to these core principles:
Take the time
We listen carefully to understand what you want to achieve. Then we thoroughly explain our advice and step you through the documents. You can be sure you know the full consequences.
Share our knowledge
We will pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.
Stick to our knitting
We only do what we're good at. You can be confident that we know what we're doing and don't pass on the cost of our learning.
Work as one team
Someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.
Fair pricing
For advice and documents, we provide a fixed or capped quote so you don't take price risk. If you're in a dispute, we map out the process and costs so you know what to expect.
It's your show
We're not in this for our egos. We're in it for a front row seat to witness your success.
