Roundwell Motors purchases a manufacturing plant for $15 million, pays $5 million in cash as down payment, and borrows the remaining $10 million from Home Providence Bank. To secure the loan, Roundwell gives the plant as collateral to Home Providence Bank.
-If Roundwell defaults on their payment, what recourse is available to Home Providence with respect to recovery of the loan?

Question

Roundwell Motors purchases a manufacturing plant for $15 million,  pays $5 million in cash as down payment,  and borrows the remaining $10 million from Home Providence Bank. To secure the loan,  Roundwell gives the plant as collateral to Home Providence Bank. 
-If Roundwell defaults on their payment, what recourse is available to Home Providence with respect to recovery of the loan?

Quizplus · Accepted Answer

Home Providence Bank would have the right to foreclose on the collateral (the manufacturing plant) and sell it to recover the outstanding loan amount if Roundwell defaults on their payment.

Roundwell Motors Purchases a Manufacturing Plant for $15 Million