Credit Support in Fund Finance: Documentation and Enforcement

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

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Conducted on Tuesday, February 11, 2020

Recorded event now available

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Course Materials

This CLE course will examine three types of credit support packages that lenders may consider when lending to a private investment fund (Fund). The panel will discuss the credit support features of unfunded equity capital commitments of limited partners (capital commitments), a guaranty and an equity commitment letter (ECL), and how they fit into the private investment fund financing structure.

Description

In the fund finance market, there are a variety of collateral and credit support packages that lenders rely upon for repayment; they include capital commitments, a guaranty, and an ECL. These forms of credit support and financing structures are utilized by Funds to improve liquidity and/or obtain leverage. The types of credit support used by Funds and lenders share much in common with traditional lending facilities and rely heavily on tried and true lending instruments. Lender and fund counsel should have a thorough understanding of each and how they fit into the private investment fund financing structure.

Listen as our authoritative panel provides practice tips for documenting and structuring credit support in fund finance transactions. The panel will discuss the variations on each type of credit support, and the pros and cons of each in different financing scenarios.

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Outline

  1. Forms of credit support in fund finance
    1. Unfunded capital commitments
    2. Guaranties
    3. Equity commitment letters
    4. Comparing capital commitments, guaranties, and ECLs
  2. Enforcement of credit support in fund finance
    1. Unfunded capital commitments
    2. Guaranties
    3. Equity commitment letters
    4. Comparing capital commitments, guaranties, and ECLs

Benefits

The panel will review these and other relevant issues:

  • How can capital commitments be used as credit support as opposed to the more frequent use as collateral in connection with a subscription backed credit facility?
  • What are the differences between a guaranty and an ECL?
  • If necessary, how does the lender enforce capital commitments, guaranties, and ECLs to repay a credit facility?

Faculty

Rylko, Kristin
Kristin M. Rylko
Partner
Mayer Brown

Ms. Rylko is a partner in Mayer Brown’s Banking & Finance practice. She represents a variety of financial...  |  Read More

Kwasigroch, Michael
Michael D. Kwasigroch
Attorney
Mayer Brown

Mr. Kwasigroch is a member of the Banking & Finance practice. He focuses his practice on representing financial...  |  Read More

Zuffante, Vincent
Vincent R. Zuffante
Attorney
Mayer Brown

Mr. Zuffante represents domestic and international financial institutions, investment funds, and corporate borrowers...  |  Read More

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