Asset-Based Lending: Navigating Borrowing Base, Article 9 Collateral Issues, Key Provisions

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Thursday, August 11, 2022

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Course Materials

This CLE course will discuss asset-based lending (ABL) transactions, including issues associated with the borrowing base, obtaining and perfecting a security interest in the assets under the UCC, and essential terms in ABL documentation. The speakers will discuss ABL facilities for restructurings, special situations, debtor-in-possession facilities, and exit facilities. The speakers will also discuss the impact of the pandemic and the current state of the financial market on ABL deals.

Description

In asset-based financing transactions, the lender lends up to a percentage of the value of the borrower's assets--the borrowing base. Assets used in ABL financing typically include accounts receivables, inventory, and equipment. The speakers will also focus on unique issues with cash in the borrowing base and whether lenders are including intellectual property in the borrowing base.

ABL lending frequently involves extensions of credit to borrowers representing a higher degree of credit risk than other types of commercial lending. As a result, ABL loans include features such as cash management and a perfected security interest in all collateral is typically required.

Listen as our authoritative panel of finance attorneys discusses structuring and documenting asset-based financing transactions, including those with senior and junior lenders. The panel will review critical issues associated with different assets in the borrowing base, obtaining and perfecting a security interest in the assets, and essential terms in ABL loan documentation.

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Outline

  1. Types of ABL facilities
  2. Borrowing base
    1. Accounts receivables
    2. Inventory
    3. Equipment
    4. Cash
  3. Obtaining and perfecting a security interest in assets under UCC Article 9
  4. Loan documentation
    1. Reserves and dilution
    2. Reporting
    3. Conditions precedent to drawing on the revolver
    4. Cash management
    5. Financial covenants in ABL deals
    6. Split collateral intercreditor agreements
  5. The impact of the pandemic and financial market on borrowing base deals

Benefits

The panel will review these and other relevant issues:

  • Critical issues with different assets in the borrowing base
  • Obtaining and perfecting a security interest in the assets under UCC Article 9
  • Cash management provisions and deposit account control agreement in ABL loan documentation
  • Split collateral intercreditor agreements

Faculty

Bell, Katherine
Katherine E. Bell
Partner, Corporate Department
Paul Hastings

Ms. Bell's practice focuses on commercial and corporate finance transactions. She regularly represents...  |  Read More

Hildebrandt, Jennifer
Jennifer B. Hildebrandt
Partner, Corporate Department
Paul Hastings

Ms. Hildebrandt represents banks, commercial finance companies, hedge funds, and other lenders in commercial and...  |  Read More

Yount, Jennifer
Jennifer St. John Yount
Co-chair of Global Finance
Paul Hastings

Ms. Yount’s practice consists of representing banks, finance companies, and other lenders in working capital...  |  Read More

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