A word about credit risk mitigation
1. In the lore of security-taking: The juridical art of making a security interest “work”. Formal security interests — things like charges, debentures, mortgages and pledges — live in a kind of purgatorial mid-sphere between the human and the divine. This means their earthly form, to have any causal effect, must be “perfect”: flawlessly composed, exactly constructed, and comprehensively compliant with all local legal formalities so that when, as surely they will, things in the material realm go properly seins en l’air and the poor terrestrial security holder looks anxiously beyond the surly horizon for the aid of the estimable gods of enforcement, things actually work as billed.
What counts as “perfection” is, literally, a lore unto itself and, depending on the jurisdictions —there may well be more than one — in which you seek celestial succour, this might be a local law pledge, registration of your interest — within a prescribed deadline — at a companies registry, notification to the chargor, or any number of other sacred incantations which range from rhythmically hitting your forehead with a hymn book, or standing on one leg at the crest of Kilimanjaro gravely reciting a Rudyard Kipling poem. Who knows? Fear of what may come from neglecting, or jsust not knowing, the necessary magic words, horcruxes and amulets that will vouchsafe one’s semi-divine state of suretyship keep many a legal eagle in business.
But as a people, we have lost our passion for the ineffable. A few years ago, those dour rationalists from the European Union enacted the Financial Collateral Directive, which has taken much of the fun, and terror, out of security creation by rendering it basically unnecessary: if a security interest counts as a “financial collateral arrangement”, the formal registration and perfection requirements which would otherwise apply (eg notification; registering the security interest with the registrar of companies, the hilarious pantomime of the Slavenburg filings) are not required. Enlightenment Now, friends.