You’re planning to sell an asset and your lender has advised you that they have an interest in the proceeds and will be taking a portion or all of the proceeds?

Cross collateralisation is where your lender has security over unrelated assets to the business or other property and are enforcing their rights to collect sale proceeds. For many business owners this can be a shock, as they were unaware of the cross collateralisation.

Cross collateralisation can be present in areas such as personal guarantees, PPSR, terms of trade and a second or secured mortgage over another property.

If your bank has advised you that they are claiming a portion of the sale proceeds then you need to ensure that you aware of your rights and understand what limits that they can place on any disposal. Unfortunately in a lot of cases, the rights of the lender are absolute and you are stuck with not many options available.

If you are concerned about the steps that your lender is taking, or don’t believe that they have a right to the proceeds, it is important to clarify this prior to a sale contract being entered into. If you have already signed an agreement and don’t have the agreement or consent of a secured lender, they may force the sale to not happen resulting in a risk for you for not completing the sale.

What should you do?

Working with our team we will examine what your risks are and what steps should be taken to minimise your exposure, this may require a staged sale or communication with your lender and seeking their consent to reduce their repayment expectations.

Give us a call today on 1300 023 782 to discuss your options.