Security Package & Loan Documentation
Assignment of Earnings
Summary
An assignment of earnings grants the financier contractual or proprietary rights over defined charter hire, freight and other vessel receivables as security.
Why this matters in ship finance
It can protect debt-service cash flows and strengthen workout options where charter receipts are central to repayment.
The concept
The assignment can cover present and future receivables, with notices, acknowledgements, collection accounts and enforcement triggers defined in the documents. Validity against a charterer and third parties depends on governing and applicable perfection law.
How it is used in practice
Identify each charter, assignability restrictions, notice requirements, payment directions and off-hire or set-off provisions; test an interrupted payment flow.
Practical issues
An assignment cannot create revenue where none is earned. Contractual restrictions, competing claims and local debtor law may limit collections.
How ShipFinance.ai uses this concept
Map assigned revenue by charter and connect it to account-control and covenant monitoring.
Key takeaways
- Define exactly which receivables are assigned
- Confirm notice and payment mechanics
- Stress charterer non-payment