Liquid Collateral agreement is made to secure the rights of selling the collateral of the creditor legally to avoid any further dispute between a creditor and a debtor. This term is normally used for corporate bankruptcy proceedings.
Liquid collateral is a term used for the cash obtained by selling any asset on which the borrower has attained a loan keeping it as a security to the lender. If the borrower is not in a condition to pay back the loan, the lender is authorized to sell the collateral (the asset provided as a security) and recover his money. The debtor holds no right or possession over this cash (means liquid collateral).
In the agreement all the terms and conditions including duration of the loan, rate of interest, documentation of the collateral etc are included along with signature of both creditor and debtor and a witness and is then further notarized by a public notary to make it legal in terms of court.
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