Hedge Fund Glossary

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Possessory Collateral

this is Collateral in which possession by the Collateral Agent is a permissible method of Perfection. All Collateral that is capable of Perfected by possession may also be Perfected by the filing of a financing statement; however, possession generally results in a higher Priority. Although all tangible Collateral (including goods) can be Perfected by possession, generally only certificated Securities, promissory Notes and negotiable documents are required to be delivered to the Collateral Agent. This means actual possession. The Collateral Agent actually has to take the certificates and put them in its safe.

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