Cross-Collateral/Cross-Default Loans: Structuring and Documenting Transactions

Intercreditor Agreements, Priority Disputes, Enforcement Challenges Post-Default or Bankruptcy

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


Conducted on Tuesday, February 4, 2020

Recorded event now available

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Program Materials

This CLE webinar will instruct finance counsel on structuring and documenting cross-collateral/cross-default first and second lien financing transactions. The panel will discuss best practices for negotiating intercreditor agreements to protect the rights of both primary and secondary lien lenders and minimize priority disputes, and how to safeguard liens in the event of borrower default or bankruptcy.

Description

Cross-default and cross-collateralization provisions can wreak havoc after a borrower's default or bankruptcy. Counsel must draft such provisions with care, taking into account the competing goals and lien positions of senior and junior lenders.

Counsel for junior lenders must carefully evaluate cross-collateralization provisions in senior loans and protect the junior lender with an intercreditor agreement. Counsel for senior lenders, likewise, need to carefully consider the intercreditor agreement to protect rights established in the senior loan documents.

Key provisions of the intercreditor agreement include a definition of common collateral, standstill periods, "free release" clauses, indebtedness caps, limitations on borrowing base advances, and drag, along with lien release, purchase options, rights as an unsecured creditor, and insolvency provisions.

Listen as our authoritative panel of finance practitioners guides you through the structuring and documentation of cross-collateral/cross-default financing transactions, negotiation of intercreditor agreements, and best practices for protecting liens post-default or bankruptcy.

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Outline

  1. Structuring and documenting cross-collateralization and cross-default loans
  2. Key provisions of the intercreditor agreement
    1. Definition of common collateral
    2. Standstill periods
    3. Structuring indebtedness caps
    4. "Free release" and drag along with lien release
    5. Purchase options
    6. Rights as an unsecured creditor
    7. Insolvency provisions
  3. Enforceability of cross-collateral provisions after default
  4. Enforceability of cross-collateral provisions in bankruptcy

Benefits

The panel will review these and other key issues:

  • Best practices for senior lenders to maximize the effectiveness of a cross-collateral/cross-default provision in the senior loan
  • How can junior lenders avoid being squeezed out by cross-collateralization in the senior lender's lien?
  • Negotiating the intercreditor agreement to minimize lender priority disputes

Faculty

Manzer, Alison
Alison R. Manzer

Partner
Cassels Brock & Blackwell

Ms. Manzer is a member of the Firm's Financial Services Group. Her practice encompasses a broad range of commercial...  |  Read More

Schulwolf, James
James C. Schulwolf

Partner
Shipman & Goodwin

Mr. Schulwolf represents senior and mezzanine lenders, venture capital investors (including SBIC’s), private...  |  Read More

Wurst, Jeffrey
Jeffrey A. Wurst

Partner
Ruskin Moscou Faltischek

Mr. Wurst is the chairman of the firm’s Financial Services, Banking, & Bankruptcy Department. He has...  |  Read More

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