Pledge of Membership Interests: Providing an Alternative to Foreclosure
A. FORECLOSING AGAINST A MEMBERSHIP INTEREST VERSES A TRADITIONAL MORTGAGE A lender can save time and money if it obtains a pledge of its borrower’s membership interests when it originates a loan. It can obtain control of real estate pledged as collateral for a commercial business loan without court intervention, and can market the pledged asset promptly after the borrower defaults. In contrast, a traditional judicial foreclosure remedy is far more expensive and time consumin