How can the Secured Party or receiver deal with the Aunt Millies Bakeries Collateral?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Secured Party or a receiver may take possession of all or any part of the Collateral and retain it for as long as Secured Party or the receiver considers appropriate, receive any rents and profits from the Collateral, carry on (or concur in carrying on) all or any part of the Distributor's business or refrain from doing so, borrow on the security of the Collateral, repair the Collateral, process the Collateral, prepare the Collateral for sale, lease or other disposition, and sell or lease (or concur in selling or leasing) or otherwise dispose of the Collateral on such terms and conditions (including among other things by arrangement providing for deferred payment) as Secured Party or the receiver considers appropriate.
Secured Party or the receiver may (without charge and to the exclusion of all other persons including the Distributor) enter upon any place of business.
- (d) Secured Party or a receiver may use, collect, sell, lease or otherwise dispose of, realize upon, release to the Distributor or other persons and otherwise deal with, the Collateral in such manner, upon such terms (including among other things by arrangement providing for deferred payment) and at such times as Secured Party or the receiver considers appropriate.
Secured Party or the receiver may make any sale, lease or other disposition of the Collateral in the name of and on behalf of the Distributor or otherwise.
- (e) All proceeds of Collateral received by Secured Party or a receiver may be applied to discharge or satisfy any expenses (including among other things the receiver's remuneration and other expense of enforcing Secured Party's rights under this Agreement), charges, borrowing (including the Lender Loan if any), taxes and other expenses affecting the Collateral or which are considered advisable by Secured Party or the receiver to preserve, repair, process, maintain or enhance the Collateral or prepare it for sale, lease or other disposition, or to keep in good standing any charges on the Collateral ranking in priority to any charge created by this Agreement, or to sell, lease or otherwise dispose of the Collateral, all as may be determined by Secured Party in its sole discretion.
The balance of such proceeds will be applied to the liabilities in such manner and at such time as Secured Party considers appropriate and thereafter will be accounted for as required by law.
- (f) Before and after default, Secured Party will have, in addition to the rights specifically provided in this Agreement, the rights of a secured party under the Indiana Uniform Commercial Code, as well as the rights recognized at law and in equity.
No right will be exclusive of or dependent upon or merge in any other right, and one or more of such rights may be exercised independently or in combination from time to time.
(g) The Distributor will remain liable to Secured Party for payment of any liabilities that are outstanding following realization of all or any part of the Collateral.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, upon default, the secured party has extensive rights regarding the collateral. The secured party can demand immediate payment of all obligations without notice. They can also appoint a receiver for any part of the collateral, and this receiver is considered the distributor's agent. The secured party isn't liable for the receiver's actions.
The secured party or receiver can take possession of the collateral for as long as they deem necessary. They can collect rents and profits, continue or discontinue the distributor's business, borrow against the collateral, repair it, process it, prepare it for sale or lease, and sell or lease it under terms they consider appropriate. They can also enter any place of business without charge, excluding all other persons, including the distributor.
Furthermore, the secured party or receiver can use, collect, sell, lease, or otherwise dispose of the collateral in any manner and at any time they consider appropriate. They can make any sale, lease, or disposition in the name of the distributor. The proceeds from the collateral can be used to cover expenses, including the receiver's remuneration, enforcement costs, borrowings, taxes, and other expenses related to preserving or preparing the collateral for sale. The remaining balance will be applied to the liabilities as the secured party sees fit, with any further balance accounted for as required by law.
In addition to the rights specified in the agreement, the secured party has the rights of a secured party under the Indiana Uniform Commercial Code, as well as rights recognized at law and in equity. These rights are not exclusive and can be exercised independently or in combination. The distributor remains liable for any outstanding liabilities even after the collateral is realized. This comprehensive control over the collateral provides significant protection to the secured party in the event of a default by the Aunt Millies Bakeries distributor.