What is important to know about blanket liens and liens on intellectual property (IP)?
Loans for capital equipment are typically secured by a lien against the specific assets financed. Other loans, including loans to finance a significant amount of soft costs, or loans for growth capital where the dollars for any corporate purposes, are often are secured by broader liens, including all-asset (blanket) liens and liens on intellectual property. In a liquidation or winding down of a company, a broader lien puts the lender who holds that lien ahead of unsecured creditors of the company, so the lender is paid in full before the unsecured creditors receive any proceeds from the liquidation. All creditors, including unsecured creditors, are always paid in full before equity holders receive any proceeds. Thus the blanket lien or lien on IP changes the priority among a company’s creditors, but not between the company’s creditors and equity investors. Receiving a blanket lien or lien on IP enables the lender to provide more flexible deal structures and more dollars because the len
