2023-09-19

3 ways Investown protects investors in case a partner stops repaying

Minimizing investors' risks is absolutely key for us, as is protecting their money. That's why we have reliable insurance policies at Investown in case the project owner stops repaying. How do they work?

The individual composition of hedging instruments may vary depending on the nature of the project. Detailed information about the individual methods of securing projects is provided directly in the description of specific projects in our application.

Every project on Investown must meet strict conditions and go through careful selection before going public. If the partner still stops paying, we have 3 effective ways to avoid investor losses:

1. Liens on real estate
2. Notarized entry
3. Lien on a business share
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1. Liens on real estate

For each project we have a lien on real estate at a higher value than the total amount owed. Therefore, should the partner stop repaying, Investown can sell the property and pay out their money to the investors.

Realization of the pledge

In the event of debt default, Investown may initiate an order on the sale of the property, which serves as collateral, on the basis of the pledge agreement. The money raised from Investown's ordered sale will be used to pay off the partner's debt to investors. If the finance from the sale is not enough to pay off the debt in full, Investown can demand the remaining amount from the partner or continue to collect the debt through a different kind of collateral.

Protecting Investors and Investown

The lien on the property gives Investown greater certainty that the partner will pay its obligations to investors in cases where it does not have enough of its own funds to service the debt. This increases the protection of the interests of investors and Investown. At the same time, the mortgage agreement deals with ways of exercising the lien on the real estate (e.g. direct sale to a third party, involuntary auction, etc.), so Investown can choose the best one for the case.

Extinction of liens

As soon as the partner fully repays his debt, or if there is an involuntary auction of the mortgaged property, the lien on the property ceases.
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2. Notarized entry

If the debtor ceases to repay the debt, Investown can take advantage of the notarization of the agreement with permission to execute the debt, which gives us the option to Immediate debt collection through enforcement.

Thus, Investown does not have to file a lawsuit to recover the amount owed to the court and wait for its decision. The bailiff may, on the basis of a notarized record, order the sale of real estate owned by the partner.

The notarized registration is also concluded by the partner's guarantors, so that debt collection can also be ordered directly against them and there is no need to file a lawsuit against the guarantors.
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3. Lien on a business share

The lien on the business share allows Investown to secure its claims against the partner by allowing us to sell its business interest in the company. Such a company usually owns real estate, which is also pledged.

Collateral of the receivable

Investown sets up a lien on the business interest of the partner as collateral for outstanding debts. This means that if the debtor does not fulfill its obligations, we can order the sale of its business interest to the company and, from the monetized pledge, satisfy the claims of investors.

In the event that the partner is in default on the payment of the debt, Investown also has the right to financial and other services related to the business interest (e.g. the right to a share in the profits of the company).

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Investown rights in respect of the pledged business interest

The greatest advantage of establishing a lien on a business share in a company is the fact that allows Investown to exercise voting rights in the company. As a result, we can influence decision-making in this company (e.g. remove a member of a statutory body and appoint another).

At the same time, the law allows the mortgagor (Investown) to acquire ownership of a business share, subject to certain conditions, if it fails to monetize the business interest.

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