: Suppose you are a lender/a professional investor. You are looking for some investment opportunity in the bond market. You find an interesting bond, with low credit rating CCC, issued by a small company ABC. Though you do have some worries about ABC companys financial performance, and default risks of the bond coupon payment. However you decide to lend to ABC company by purchasing its CCC credit rating bond, and you require ABC company an assignment of the common stock as collateral on the loan. Then, if the business fails to repay its loan, the ownership of the stock certificates can be transferred directly to you/the lender. Why might you want such an assignment? What advantage of the corporate form of organization comes into play here?