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A Hypothecation Agreement lets you pledge assets as security for a loan while keeping possession of them. In Irish banking, it's commonly used when borrowers need to secure funding but want to continue using their assets - like inventory, equipment, or accounts receivable - in daily operations.

Irish law recognizes these agreements as distinct from standard mortgages or fixed charges, making them particularly useful for businesses seeking working capital. The lender gets a security interest in the assets without physically holding them, but can claim them if the borrower defaults. Banks often require these agreements under the Consumer Credit Act 1995 when lending to small businesses or funding trade transactions.

Consider using a Hypothecation Agreement when you need immediate financing but can't afford to give up possession of your business assets. This arrangement works especially well for Irish retailers who need working capital while keeping their inventory available for sale, or manufacturers who must maintain access to their equipment.

It's particularly valuable when seeking trade finance from Irish banks, or when expanding operations requires quick access to funds. Many businesses use these agreements during seasonal peaks - like retailers stocking up for Christmas - or when bidding on large contracts that require upfront capital. The key advantage is maintaining business operations while using those same operating assets as loan security.

• General Business Hypothecation: Used for securing business loans with inventory, receivables, or equipment - most common in Irish retail and manufacturing sectors
• Stock Market Hypothecation: Specifically for pledging securities and investment portfolios as collateral, popular with brokers and investment firms
• Trade Finance Hypothecation: Tailored for import-export businesses, covering shipping documents and goods in transit
• Project-Specific Hypothecation: Designed for construction and development projects, securing funding against future receivables and work-in-progress
• Revolving Hypothecation: Allows for multiple borrowings against the same collateral pool, common in working capital arrangements

• Borrowers: Usually Irish businesses needing working capital while retaining use of their assets - commonly retailers, manufacturers, or trading companies
• Banks and Financial Institutions: The primary lenders who require and hold Hypothecation Agreements as security for loans
• Legal Counsel: Draft and review agreements to ensure compliance with Irish banking regulations and security requirements
• Corporate Directors: Authorize and execute these agreements on behalf of borrowing companies
• Asset Valuers: Assess and verify the worth of hypothecated assets for lending purposes

• Asset Details: Compile a detailed inventory of all assets being pledged, including descriptions, locations, and current market values
• Ownership Verification: Gather proof of ownership documents and confirm no existing liens or encumbrances on the assets
• Loan Terms: Document the specific financing arrangements, including amount, interest rates, and repayment schedule
• Business Information: Prepare company registration details, director authorizations, and financial statements
• Insurance Coverage: Confirm adequate insurance for hypothecated assets and arrange for lender notation
• Template Selection: Use our platform's Irish-law compliant templates to ensure all mandatory elements are included correctly

• Parties & Assets: Clear identification of lender, borrower, and detailed description of hypothecated assets
• Security Interest: Explicit creation of the security interest under Irish law, including perfection requirements
• Loan Terms: Specific details of the underlying credit facility, repayment terms, and interest rates
• Asset Control: Rights and obligations regarding possession, use, and maintenance of hypothecated assets
• Default Provisions: Consequences of default and lender's enforcement rights under Irish banking regulations
• Warranties: Borrower's declarations about asset ownership, condition, and absence of prior encumbrances
• Governing Law: Express submission to Irish jurisdiction and applicable regulatory framework

A Hypothecation Agreement differs significantly from an Asset Purchase Agreement, though both deal with business assets. The key distinction lies in ownership and control: hypothecation lets you keep using your assets while pledging them as security, while an asset purchase involves complete transfer of ownership.

• Control and Possession: Under hypothecation, the borrower maintains possession and use of assets; with asset purchase, the buyer takes full control
• Purpose: Hypothecation secures a loan while continuing business operations; asset purchase permanently transfers ownership for a one-time payment
• Duration: Hypothecation lasts until loan repayment; asset purchase is a permanent transfer
• Legal Framework: Hypothecation falls under Irish banking and security law; asset purchase is governed by commercial property and sale regulations
• Risk Profile: Hypothecation carries default risk for both parties; asset purchase primarily involves transfer risks and warranties