The Collateral Trustees Clause Samples

The "Collateral Trustees" clause defines the role and responsibilities of trustees appointed to hold and manage collateral on behalf of secured parties in a financial transaction. Typically, this clause outlines how the collateral trustees are designated, their authority to act in the interests of all lenders or creditors, and the procedures they must follow in managing, releasing, or enforcing collateral. For example, the clause may specify that the collateral trustee can take possession of pledged assets if a borrower defaults, or that they must act according to instructions from a majority of lenders. The core function of this clause is to centralize the management of collateral, ensuring efficient and coordinated action among multiple creditors and reducing the risk of conflicting claims or actions regarding the collateral.