Pandgever

The pledgor is the party that grants a pledge over movable property or rights as security for a debt. This is typically effected by means of a pledge agreement with the pledgee, under which the pledgor retains ownership while the pledged asset serves as collateral.

The pledge confers on the pledgee, in the event of default, the right to sell the pledged asset and to recover its claim from the proceeds. The pledgor bears the risk that the pledged assets may be lost if the debt is not discharged.

In practice, a company often acts as pledgor in financing arrangements in which inventory, receivables or machinery are provided as security to a bank or investor.