It is the trust business through which the obligations of a debtor in favor of one or several creditors are protected, by means of the assignment of an asset to said objective and the stipulation of a private and fast procedure to obtain payment of the credit in the event of non-compliance.
For this purpose, the trustor transfers as an irrevocable commercial trust, the ownership of one or more assets to the trust company, with the purpose of guaranteeing compliance with the obligations that the trustor or third parties are responsible for, and in favor of one or several creditors.
In the event of non-compliance, the sale or auction of the asset or assets is carried out, so the unfulfilled obligation is satisfied, or in its place, the voluntary delivery by the debtor and acceptance of something by the creditor in lieu of fulfillment of the agreed obligation is carried out. When referring to cash flows pertaining to the warranty, the payment of the unfulfilled obligation is carried out by channeling the money collected to the respective payment.
Giving notice to the Trust Company when failure to fulfill the obligation covered under the trust takes place, corresponds to the Secured Creditor and is in its own interest.
The following types of warranty trusts may be set up:
It is the trust business consisting in the irrevocable transfer of the ownership of one or more assets by way of commercial trust or the delivery under irrevocable trust order, with the purpose of guaranteeing fulfillment of the obligations of the trustor or of third parties, in favor of one or several creditors.
It is the trust business consisting in the transfer or irrevocable delivery to a trust company of a future flow of resources that are the result of an assignment of financial rights that are destined to guaranteeing the fulfillment of an obligation and taking care of the debt.