Raising debt by taking advantage of one’s own assets, even fully amortized, is made possible by a fiducie. It allows to secure financing unprovided by banks with reduced tax frictions.
becomes the owner of the assets and secures lenders,
allocates (when applicable) income generated by the assets between borrowers and creditors,
returns assets to the settlors after full repayment of the debt,
all the above transacting in a tax-neutral manner.
Protection of the lender
Strength of the collateral trust, especially in the case of insolvency proceedings, owing to a convention de mise a disposition generating revenues allocated to the payment of the debt.
Control of the assets and of their value through time.
Protective LTV based on the quality of the assets and its cash flow generation.
Convenience for the borrower
Retains the use of the property, including its availability for a potential sale (subject to the agreement from the lender)
Accesses a new class of lenders, shouldering on the robustness of the fiducie, and secure financing that banks would have normally shunned.
Avoids negative tax implications found in other asset-backed financings (e.g. sale & lease-back)
Maintains accounting and tax treatment associated with the asset : depreciation & amortization, time allowance on capital gain, revenues,…
Predefines, in agreement with the lender and the trustee, terms and conditions of the sale of the asset in case of default: price, time frame, buyers, exclusions…