cross-collateralization

Another example of cross-collateralization occurs when an individual may have a checking account and a loan at the same bank.

Technically, cross-collateralization expires when the borrower has no outstanding loans with the bank.

Enron proposed, according to the e-mail message, imposing a cross-collateralization that allowed Mr. Fastow to remove the new structure any time he wanted.

Each of his three casinos is legally distinct, with no cross-collateralization, and bondholders have recourse only to the assets of each.

Cross-collateralization is a term used when the collateral for one loan is also used as collateral for another loan.

In the context of bankruptcy, cross-collateralization also means the collateralization of general unsecured prepetition debt by collateral securing postpetition loans.

Carl E. Bass, who served as the group's primary contact on Enron-related matters, told the accountants that they would have to engineer a structure known as a cross-collateralization.

Had the advice on cross-collateralization been properly followed, accountants involved in the case said, Enron may well have had to report some small level of losses in 2001 from the Raptors.

While a cross-collateralization would allow the entities to pay off their loans, it would also decrease the value of the healthy Raptors, since now they would be on the hook for more debts.

As a result, according to evidence introduced in the trial, Mr. Fastow vehemently objected to the idea of the cross-collateralization, instead pushing Andersen to find another way to accomplish the same goal.

Mr. Bass, in consultation with Mr. Stewart, maintained that a permanent cross-collateralization, in which the healthy Raptors were truly at risk for the obligations of the sick ones, was the only way such a transaction could be structured.