The banks had United Spirits stocks pledged as collateral against their loans to Kingfisher.
An Indian court on Tuesday refused to stop the creditors from selling shares of UB Group pledged as collateral.
EODC's shares in Phoenix already pledged as collateral, the firm needs an injection of capital from a white knight.
Then it learned it might not actually wind up with the spectrum which had been pledged as collateral to bondholders and reversed position.
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Banks have owned their branches and operational facilities, and prevailed in litigation permitting them to rent out surplus space and receive property pledged as collateral after a default.
In Europe many funds found that the assets they pledged as collateral in return for financing from Lehman have become trapped in the bankruptcy process as administrators strain to work out which assets genuinely belong to clients.
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Yet the securities were pledged as collateral.
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Also, there are reports that officials have pledged non-transferable assets as collateral, like protected forests.
Kingfisher owner Vijay Mallya is struggling to keep the airline afloat and has pledged personal and UB Group assets as collateral against the loans.
Under this rule supervisors should require financial institutions to value assets using a long-term moving average when they are pledged (explicitly or implicitly) as collateral for new credit.
The brokers may have been pledged collateral against their hedge-fund loans but, as Merrill Lynch recently discovered in its dealings with two Bear Stearns hedge funds, it may not be possible to sell that collateral for anything like the current market price.
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