What is meant by an 'enterprise-wide' or 'blanket' security interest?

• A. A single pledge that covers substantially all assets of the debtor (or related entities) rather than a single asset, creating a broad lien.
• B. A lien on a single asset.
• C. A lien solely on real property.
• D. A lien on accounts receivable only.

Answer: (A)

An enterprise-wide or blanket security interest is one security agreement that attaches to substantially all of the debtor’s assets (and often assets of related entities) rather than just a single asset. This creates a broad lien, giving the secured party a claim against a wide pool of collateral if the debtor defaults, which provides flexibility in enforcement and collateral management. It’s commonly used in asset-based lending to secure lines of credit with broad coverage of the debtor’s assets. A lien on a single asset is narrow, a lien solely on real property is a mortgage-like lien on real estate, and a lien on accounts receivable only covers just one portion of the asset base, all of which are not as comprehensive as an enterprise-wide blanket lien.