Credit Support in Fund Finance: Documentation and Enforcement

Capital Commitments, Guaranties, Equity Commitment Letters

A live 90-minute premium CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Thursday, February 16, 2023 (in 12 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE course will examine three types of credit support packages that lenders may consider when lending to a private investment 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 in 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. Guarantees
    3. Equity commitment letters
    4. Comparing capital commitments, guarantees, and ECLs
  2. Enforcement of credit support in fund finance
    1. Unfunded capital commitments
    2. Guarantees
    3. Equity commitment letters
    4. Comparing capital commitments, guarantees, 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, guarantees, and ECLs to repay a credit facility?

Faculty

Lagay, Cheryl
Cheryl A. Lagay

Partner
Reed Smith

Ms. Lagay focuses her practice on representing institutional lenders, agent banks, U.S. and non-U.S. corporate...  |  Read More

Lawlor, James
James S. Lawlor

Counsel
Reed Smith

Mr. Lawlor is a member of the Financial Industry Group. His practice includes representation of lenders and borrowers...  |  Read More

Miller, Charlie
Charlie J. Miller

Attorney
Reed Smith

Mr. Miller's practice focuses on fund finance transactions, primarily representing domestic and foreign lenders and...  |  Read More

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