Nonrecourse Debt . . .

is an obligation that entitles the holder to collect only against assets pledged to that debt as collateral. A promissory note that permits the holder to take the collateral in payment of the note but not to collect from the maker personally in the event of a default would be nonrecourse debt. Sometimes investors refer to company debt not guaranteed by management as nonrecourse debt in order to point out that the investor cannot look to the personal assets of individual management members to satisfy the loan. See: Collateral, Personal Guarantees, Promissory Notes.