Can a creditor/lender secure loans to a franchisee, and a licensee with royalty payments from the franchise and license agreements or with an equity interest in the debtor LLC?

As explained below, the royalty payments cannot serve as security for a loan to the Debtor LLCs because these payments are being made by the Debtor LLCs to the franchisor and the licensor. Only property/ revenue belonging to the Debtor (e.g., accounts receivables, not accounts payable) can serve as collateral/security. As for the equity interest in the Debtor LLCs, this may be possible, but would be subject to possible restriction Read More