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Collateral Accounts in NAV and Subscription Facilities: Control Agreements; UCC Perfection Considerations

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

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Conducted on Thursday, April 18, 2024

Recorded event now available

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This CLE webinar will discuss the importance of single-purpose collateral accounts in subscription and net asset value (NAV) financing facilities. The panel will review what constitutes “control” of collateral accounts under the Uniform Commercial Code (UCC) and will highlight best practices for perfecting and enforcing a lender’s interest in collateral accounts via loan documents, control agreements, security agreements and financing statements.


Subscription facilities are supported by a collateral account for payment of capital contributions by investors and are accompanied by a security agreement and a UCC-1 Financing Statement, which allow the administrative agent the right to call if the facility is in default.

NAV facilities are supported by a collateral structure where lenders have a direct lien on the investment or a lien on the equity of the of the owner of the investments. Sometimes a guarantee or pledge of capital commitments is required from the fund as additional credit support. NAV structures may contain covenants requiring the fund to maintain a minimum total NAV and the loan-to-value ratios are dependent upon the asset class and asset diversification.

Control agreements are a tri-party agreement between the debtor, secured party and custodian of the collateral account and grants the secured party control of a deposit or a securities account. Demonstrating and obtaining control of deposit and securities accounts is the key for a lender to enforce and perfect its security interest under the UCC.

Listen as our authoritative panel discusses the interplay of the UCC’s equitable principles as they apply to a subscription or NAV facility lender’s interest in collateral accounts and best practices to ensure a lender’s security interest is protected.



  1. Financing the fund lifecycle
    1. Initial stages
    2. Later stages
  2. Subscription facilities
    1. Collateral
    2. Recovery
  3. NAV structures
    1. Collateral structures
    2. Financial covenants
    3. Loan-to-value ratio
    4. Asset pool
    5. Valuation of underlying assets
    6. Remedies
  4. Control agreements
    1. Deposit accounts vs. securities accounts
    2. Perfection
    3. Custodian liens
    4. Indemnification
  5. Account issues in practice


The panel will address these and other key issues:

  • How do collateral account structures differ between subscription and NAV financing facilities?
  • Why does “control” with respect to collateral accounts matter under UCC 9-104 and how can lenders obtain “control” and perfect their security interests in deposit and securities accounts?
  • Does a secured party have “control” of the collateral if the depository bank/securities intermediary can refuse to comply with a secured party’s instructions?
  • Does a security interest held by a depository bank or securities intermediary have priority over a security interest held by another secured party?


Edelboim, Leah
Leah Edelboim

Cadwalader, Wickersham & Taft

Ms. Edelboim has more than a decade of experience in fund finance transactions, having worked on some of the largest...  |  Read More

Kerfoot, Matthew
Matthew Kerfoot

Proskauer Rose

Mr. Kerfoot focuses principally on fund finance and structured finance transactions. He has held leadership positions...  |  Read More

Shultz, Brent
Brent Shultz

Haynes and Boone

Mr. Shultz has successfully negotiated and closed billions of dollars of complex debt financings for his clients....  |  Read More

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