Liquidation Measure 

Definition

An initiative by the bank to receive compensation for the open financial obligations of a borrower.

 

Use

Liquidation measures can be used to maintain detailed information on the proceedings of a liquidation process that in turn determine the progress of liquidation process.

 

To create a liquidation measure, you must set the status of liquidation to Start Liquidation. You can select the possible liquidation statuses by choosing  with the quick info text Activities; the liquidation statuses are listed under the activity group Liquidation.

Structure

The liquidation measure details are structured as follows:

Basic

The basic master data for a liquidation measure includes:

·        Dates

In this section, you must specify if the liquidation has been initiated by the own bank or an external bank with either secondary or prior ranked charges on the collateral object.

 

The other relevant dates that you can maintain include:

¡        Start and end dates for the liquidation process.

¡        Date on which an application is made in the court of law.

¡        Date on which the court permits liquidation.

¡        Date on which the bank receives the court’s order for liquidation.

 

·        Values

The details in this section include the market value and the date on which the valuation was performed. These details will be calculated internally and shown to the user. You can choose to set a maximum of two limits for the expected proceeds from the liquidation measures. For example, you can set a limit to specify that a bid must be accepted only if the liquidation proceeds are greater than the specified limit.

 

The standard system allows you represent market value for liquidation measures by any value types that you may require. For example, the market value may represent the purchase value, base value or even the realizable value for liquidation measure. You define this mapping in the Implementation Guide (IMG) Customizing by choosing Collateral Management ® Liquidation ® Assign Value Types as Market Values. You must have already defined value types by choosing Collateral Management ® Object Management ® Basic Functions ® Define Value Types.

 

·        Process

In this section, you can create the individual steps in the liquidation process and specify the corresponding details such as the process date type, the maximum amount and the enforcement amount.

 

Proceeds and Costs

You can enter the expected and actual proceeds accrued from the liquidation proceeds in this section. You can use the cash flow details including the cash flow type, the amount and the cash flow date to determine the income and expenditure for the liquidation measure.

The cash flow category for the liquidation measure will be derived from the cash flow type settings defined in the Customizing. The standard system provides two cash flow categories, namely the costs and the proceeds.

The currency of the expected proceeds will be used for all amount fields in liquidation measures.

 

Business Partner / Documents

Business partners involved in the liquidation process and the documents relevant to the liquidation process can be assigned in this section.

 

Integration

The collateral agreement – receivable assignment details will be shown in the liquidation measure in order to identify the receivables that have due payment obligations and which are relevant for the liquidation measure. The details that are shown include the identifications for the receivables and the collateral agreements, agreement type, amount to be repaid, currency for the receivable and the availability of enforcement prerequisite.