"Creation of Business Growth Security Interests": Finance Practice Group

Creation of Business Growth Security Interests

The "Report of the Working Group on the System to Support Business Focused Lending Practices" (the "Report") has been released by the Working Group on the System to Support Business Focused Lending Practices (the "Working Group") of the Financial System Council. The business growth security interest proposed in the Report is expected to be enacted by the end of 2023. In this newsletter, we discuss some points of interest for international readers. It should be noted that future steps in the legislative process may ultimately result in a system that differs from the one envisioned in the Report.

What is a Business Growth Security Interest?

The business growth security interest proposed by the Working Group is a single security interest that takes all of the debtor's current total assets as collateral, including tangible assets, intangible assets, contractual relationships, assets generated by business activities, and future cash flows to be acquired.

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