Usually a cession of book debts takes place in terms of an outandout security cession. By signing a cession of book debts a debtor therefore agrees to transfer to the creditor the right to claim money that is or may become due and owing to the debtor by their debtors. A session on cessions of debtors in business rescue lexology. In our view, it is clear that business rescue practitioners may not lawfully suspend a cession of book debts or for that matter any security right which a bank may enjoy. The assignment is a legal transfer to the other party, who. Cession of book debts loan security agreements online. Note that the cession of book debts can be used to cover debts that already exist and debts that may arise in future. Factoring and cession of debtors explained inoxico. A cession is the act by which a personentity known as the cedent transfers their personal right to another known as the cessionary.
Book debt represents payments due the company by customers typically in the form of accounts receivable. The cession can be constructed as an outandout cession or as a cession in security. Cession is a bilateral juristic act whereby the cedent transfers its rights to the cessionary. By signing a cession of book debts contract, the debtor agrees to transfer to the creditor the right to claim money that is owed to the debtor by the debtors debtors. By concluding this cession of book debts, the borrower agrees to transfer to the lender, its rights, title and. Risk can be transferred to the reinsurer in one of two ways. The portions of the obligations in an insurance companys policy portfolio that are transferred to a reinsurer. This cession of book debts agreement may be used where a debt is owed or may in the future be owed by a debtor, and additional security is required. The term debt assignment refers to a transfer of debt, and all the associated rights and obligations, from a creditor to a third party.
The factoring of books debts irrespective of whether such is with or without recourse and the discounting of book debts and. Cliffe dekker hofmeyr the nature of cession in security. Debt assignment may occur with both individual debts and business. When a company cedes book debt, they are effectively giving some creditor the rights to.
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