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Simple English definitions for legal terms
securitizable
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A quick definition of securitizable:
Securitizable: This means something that can be turned into money quickly. For example, when someone owes money to a company, that company can sell that debt to someone else to get money right away. This is called securitizing the debt. It can also refer to assets that can be easily turned into cash, like loans or accounts receivable.
A more thorough explanation:
Definition: Securitizable is an adjective that describes an obligation or asset that can be packaged and sold to others for corporate purposes. It refers to an asset that can be quickly converted into cash, such as commercial-loan receivables and trade accounts receivable.
1. A bank has a portfolio of commercial loans that it has made to various businesses. These loans are securitizable because the bank can package them together and sell them to investors as a security.
2. A company has a large number of trade accounts receivable, which are payments owed to them by their customers. These accounts receivable are securitizable because the company can sell them to a third party and receive cash upfront.
Both of these examples illustrate the concept of securitization, which involves pooling together assets or obligations and selling them to investors as a security. This allows the originator of the assets or obligations to receive cash upfront and transfer the risk to the investors who purchase the security.