protection-stack - MediaHedge Underwriting Knowledgebase

# Protection Stack The MediaHedge protection stack is a layered credit architecture in which each control addresses a distinct failure mode. It avoids relying on one guaranty, one collateral class, one filing or a high coupon as blanket protection. ![[assets/diagrams/protection-stack.svg|Five-layer MediaHedge protection stack with the distinct risks addressed by each layer]] *Conceptual view: the layers reinforce one another, but no layer substitutes for a missing eligibility, control or enforcement requirement.* ## Layers 1. **Eligibility and verification:** only documented, enforceable and independently supported value enters the borrowing base. 2. **Sizing and structural subordination:** advance rates, LTV, concentration, budget limits, reserves and tenor create downside cushion. 3. **Priority and cash control:** the [[wiki/concepts/security-package|Security Package]] and [[wiki/concepts/cash-control-and-waterfalls|Cash Control]] make collateral reachable and proceeds capturable through grants, perfection, assignments, notices, accounts and waterfalls. 4. **Completion and risk transfer:** [[wiki/concepts/full-financing|Full Financing]], [[wiki/concepts/completion-protection|Completion Protection]] and [[wiki/concepts/production-insurance|Production Insurance]] address specified delivery and insured-event risks. The service platform, legal issuer and ultimate risk-bearing entity must be identified separately. 5. **Surveillance and enforcement:** reporting, covenants, triggers, cure rights, step-in powers and remedies preserve options after closing. ## Failure-Mode Mapping | Risk | Primary protections | | --- | --- | | Failure to finish or deliver | [[wiki/concepts/full-financing\|Full Financing]], contingency, [[wiki/concepts/completion-protection\|Completion Protection]] and takeover rights | | Collateral impairment | [[wiki/concepts/loan-sizing\|Eligibility and sizing]], assignments, liens, reserves and obligor analysis | | Cash diversion | Payment directions, [[wiki/concepts/cash-control-and-waterfalls\|controlled accounts and waterfall]] | | Casualty or liability | [[wiki/concepts/production-insurance\|Risk-specific insurance]] | | Specifically bonded payment default | Obligor underwriting and [[wiki/concepts/surety-credit-protection\|Surety or Credit Protection]], if available | | Deterioration or default | [[wiki/concepts/monitoring-and-servicing\|Monitoring]], triggers, cure and [[wiki/concepts/defaults-workouts-and-recoveries\|workout governance]] | | Operational or agency failure | Custody, audit, data portability, reserved matters and replacement servicing | ## Integration Rule > [!note] Important Distinction > The value of the stack depends on consistency across underwriting conclusions, loan documents, interparty arrangements, assignments, completion terms, insurance endorsements and actual bank/account operations. Duplicate documents do not create independent recovery if they rely on the same underlying value or event. ## Limits and Common Errors - [[wiki/concepts/completion-protection|Completion protection]] does not insure distributor solvency, incentive realization or market performance. - [[wiki/concepts/surety-credit-protection|Surety protection]] covers only the specifically bonded obligation and remains subject to claim compliance and its stated limit. - Production insurance pays only for covered loss under policy terms. - A familiar brand, broker, MGU, risk manager or marketplace name is not proof of the legal lender, policy issuer, guarantor or entity responsible for payment. - A lien cannot create value that the borrower does not own. - Cash control cannot compensate for a collateral shortfall. - Pricing cannot cure ineligible collateral or a broken enforcement path. - Correlated sources must be assessed at both transaction and portfolio levels. ## Continue Exploring [[MediaHedge Knowledgebase|Home]] · [[wiki/syntheses/financier-diligence-route|Financier’s Guide]] · [[wiki/syntheses/credit-lifecycle|Credit Lifecycle]] · [[wiki/syntheses/media-finance-lending-landscape|Market Landscape]]