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Appropriation: Difference between revisions
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Appropriation is a remedy created by the [[Financial Collateral Regulations]] the right to take an asset against a debt, as opposed to selling it: | |||
:''“Where a legal or equitable mortgage is the [[security interest]] created or arising under a [[security financial collateral arrangement]] on terms that include a power for the collateral-taker to appropriate the collateral, the [[collateral-taker]] may exercise that power in accordance with the terms of the [[security financial collateral arrangement]], without any order for foreclosure from the courts.”'' | |||
“[[Appropriation]]” is – helpfully, but typically – not defined, but the directive does require that the [[collateral taker]] has an agreed valuation method. | |||
It might be useful in some cases, especially where encumbered assets are illiquid or not easily sold. But the problem becomes how one attaches a value to the appropriated asset. The less liquid it is, the more contentious the value is likely to be. The more liquid it is, the less need there is for a right of appropriation, since the collateral taker can just sell it in the market. | |||