The primary legal issue concerning the General Security Agreement is whether the in case of default of the loan, what assets of the business can he obtain. General security agreements cover all business assets as collateral. The assets in General Security Agreements cover the current assets and those that the business might obtain in the future. The General Security Agreement includes intangible and tangible assets. Intangible assets include intellectual property, patents, and trademarks. Tangible assets include inventory, machinery, equipment, and other tangible property. There may arise a problem in Westerville’s case because the income flow is non-existent, available “cash on hand” is limited, available inventory is limited, and the business has been closed. To solve the problem that may arise, I recommend that the partners come up with a better loan agreement or the General Security Agreement should adequately state the following: the parties’ obligations, grant of security in interest, information of guarantor, warranties, and representations by the debtor, collateral description, events of default, consequences of default, remedies, ownership of collateral and list of creditor’s assets.
The second issue is whether Fasir’s financial interests are registered. An issue may arise in case the Company becomes insolvent, what assets Fasir should obtain. It is a requirement that any creditor registers their interest on the Personal Property Securities Register (PPSR) so that their financial interests are apparent and stipulated in the assets of the Company. First registration on PPSR will mean that a person has priority in case the Company becomes insolvent. This issue can be resolved by and the other partners registering the General Security Agreement. Generally, the GSA has a lifespan of 5 years. Therefore, it should be renewed every five years, or the priority will be lost. Additionally, Fair should accurately register and describe the collateral on the Personal Property Securities Register.
At Legal writing experts, we would be happy to assist in preparing any legal document you need. We are international lawyers and attorneys with significant experience in legal drafting, Commercial-Corporate practice and consulting. In the last few years, we have successfully undertaken similar assignments for clients from different jurisdictions. If given this opportunity, The LegalPen will be able to prepare the legal document within the shortest time possible. You can send us your quick enquiry ( here )
