Assignment of earnings

Assignment of earnings is security a ship finance lender takes over the cash a vessel generates: charter hire, freight, demurrage, pool income, and the proceeds of any insurance claim. It sits alongside the first preferred ship mortgage and the assignment of insurances in a standard secured loan package. The borrower directs charterers and the protection-and-indemnity club to pay an account the lender controls, and a notice of assignment is served so the payer recognizes the bank’s claim. On default the lender collects earnings directly. It converts an unsecured income stream into priority collateral.