Pledge Agreements for Partnership and LLC Equity Interests
Crafting Security and Operating Agreements to Protect Lender Interests
Recording of a 90-minute CLE webinar/teleconference with Q&A
Conducted on Tuesday, April 3, 2012
Recorded event now available
This CLE webinar will prepare counsel for lenders to draft equity interest pledge agreements for partnership and LLC interests that provide maximum protection for the lender's interest. The panel will also outline corresponding provisions that should be contained in the borrower’s operating or partnership agreement.
Description
Equity interests in LLC and partnership interests are a common form of collateral in secured finance transactions, particularly mezzanine financing. The pledge agreement documents the security interest in an LLC or partnership equity interest.
Critical provisions to protect the lender's interests include the borrower’s choice to opt-in to UCC Article 8. Representations, warranties and covenants of pledge agreements are often different than standard provisions in a security agreement for business assets.
The borrower’s operating agreement should contain the Article 8 opt-in and other key provisions, including restrictions on bankruptcy and disposal of business assets without the lender's consent, certificating the partnership interests, and taking physical possession of certificates at closing.
Listen as our authoritative panel of practitioners discusses UCC Article 9 and Article 8 requirements for equity interests in LLC or partnership interests, as well as best practices for drafting pledge agreements and making corresponding amendments to the borrower's operating agreement that maximize protection for the lender.
Outline
- Overview of UCC Article 8 requirements
- Drafting the pledge agreement
- Amendments to the borrower’s operating agreements
- Common pitfalls and strategies to best protect the lender
Benefits
The panel will review these and other key questions:
- Why is UCC Article 8 method of perfection of equity collateral preferable to the financing statement under Article 9?
- What steps should the lender take to ensure that the borrower cannot opt-out of Article 8?
- What are the key provisions that should be included in the borrower's operating agreement or partnership agreement?
Faculty
James D. Prendergast,
SVP, Legal Counsel-Division
First American Title Insurance Company, Santa Ana, Calif.
He is General Counsel of the Uniform Commercial Code Division of First American Title Insurance Company. Prior to joining First American in 2001, he was in private practice in the Los Angeles area for over 25 years concentrating his practice primarily in the areas of commercial and corporate finance. He is Co-Chair of the ABA Joint Task Force on Filing Office Operations and Search Logic.
Grant Puleo,
Partner
Procopio Cory Hargreaves & Savitch, Carlsbad, Calif.
His practice includes a wide variety of real estate, finance and business transactions. He has extensive experience in a broad array of commercial and multi-family residential real estate transactions, including acquisitions, development, syndication, dispositions, and specialized leasing and financing of all product types throughout California and the United States.
Ordering
Online CLE - Audio Recording
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CLE:
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Program Materials
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Customer Reviews
I appreciated the tips regarding language needed in pledge and LLC agreements.
Alan Schacter
Allen & Overy LLP
Program did a great job distinguishing the differences between Art 8 and Art 9 equity interest and effects plus practical ways to improve intercreditor agreements and considerations.
Craig Moore
AmericanWest Bank
I liked the speaker's overall information on the industry and how compelling the presentation was. The program was very thought provoking, and covered more than what we expected.
Judy Chen
Chapman and Cutler LLP
I liked the combination of the substantive material and the legal perspective.
Jane Shea
Frost Brown Todd LLC
I liked the detailed statistics and case discussions provided by the speakers.
Kathryn C. Ellsworth
Grais & Ellsworth LLP
Finance Law Advisory Board
Partner
Gibson Dunn & Crutcher
Partner
Nixon Peabody
Partner
Alston & Bird
Counsel
Mayer Brown
Partner
O’Melveny & Myers
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