With asset values on the whole diminishing, a number of funders are revisiting their corporate loan portfolios to examine their security packages, both in relation to valuation and enforceability. Are lenders as secure as they thought? Has that fixed charge evolved into a floater? Were all the appropriate registrations made at the time? Is there anything else that a funder can do that might actually improve the value of an asset class?
One class of assets that, for historic reasons, has not typically received sufficient diligence from funders in the past is intellectual property (IP). This stretched from overlooking specific registration requirements on the IP, both nationally and internationally, to ensuring that the right controls were put in place to manage and control the IP with a view to maximising value.
However, as IP as a financial asset is now gaining a higher profile in consequence of a combination of IFRS 3, the new UNCITRAL Guide to Secured Lending, and the Sarbanes-Oxley transparency requirements for accounting for and managing intangibles transparently, it might be time to dust down those files to do those checks. In doing so, there are potential benefits for both the lender, in obtaining more clarity on the quality (and value) of its security over these assets, and for the borrower, who may be able to show that its collateral could be much more valuable if the IP assets were managed effectively.