unencumbered assets

Definition

Property or assets not pledged as collateral for any debt, representing truly owned stuff that hasn't been promised to creditors. The financial equivalent of actually owning your car rather than the bank owning it while you make payments.

Example Usage

The real estate firm maintained $200 million in unencumbered properties to provide flexibility for future financing without complex intercreditor issues.

Origin

Legal and finance terminology where 'encumbrance' refers to claims or liens against property.

Fun Fact

In bankruptcy, unencumbered assets are worth their weight in gold because they provide actual value to unsecured creditors rather than just secured lenders.

Source: Corporate finance and bankruptcy law

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pww

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