From Collateral to Cash: A Legally Screened Finite-Horizon Decision Protocol
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Abstract
Recovering legal title to collateral does not guarantee that a lender will collect cash. This conceptual study combines a legal-admissibility screen with a finite-horizon selling rule that permits repeated auctions or negotiated sales when their completion windows and legal conditions fit the time remaining. Illustrative calculations distinguish conditional proceeds, attempt costs, holding outlays, completion probabilities and cash at the cutoff. With two years available, auction-first yields 54.31 index units against 53.08 for direct sale; at 1.70 years, direct sale yields 51.13 against 50.21 for auction. The reversal results from packing assumed 0.50- and 0.85-year attempt windows, not evidence of auction superiority. A separately costed rental branch yields 46.86 at a hypothetical sale-completion probability of 0.70; matching the best two-year selling policy requires approximately 0.90. An algebraic decomposition identifies when continuation outweighs direct sale’s single-attempt advantage. China’s historical repossessed-asset rules and Ghana’s distinct default-notice, registry, valuation and realisation provisions supply conditional legal screens. The framework separates financial scheduling from legally completed disposal. No actual recoveries or causal effects are estimated.
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