Fraudulent Conveyance Exposure for Intercorporate Guaranties, Integrated Transactions and Designated-Use Loans

Navigating the Contours of Section 548 Reasonably Equivalent Value Defense in Complex Lending Transactions

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


Conducted on Wednesday, January 4, 2017

Recorded event now available

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Program Materials

This CLE webinar will provide finance and bankruptcy counsel with a review of the legal and economic issues in preferential transfer and fraudulent conveyance avoidance actions for intercorporate guaranties, integrated transactions and designated-use loans. The program will discuss how these transactions are at risk of being voided for lacking reasonably equivalent value and how lenders can show indirect economic value of the transaction to satisfy Section 548.

Description

Intercorporate guaranties, such as upstream, downstream and cross-stream guaranties, are commonly found in many financing deals. Enforcement of intercompany obligations presents risks that the guaranty may be avoided for lack of consideration or as a fraudulent conveyance if the guarantor files bankruptcy.

When loan proceeds are designated for a specific use, as is often the case in LBOs, the borrower generally lacks sufficient control over the funds. Thus, the lender must show that the borrower received some other economic value in the transaction to establish reasonably equivalent value.

Section 548’s reasonably equivalent value inquiry provides the court some discretion in applying the rules and standards to the facts of the transaction. Lenders must be prepared to show that the transaction yielded economic benefits to the borrower at the time the loan was made.

Listen as our authoritative panel of finance practitioners and litigators discusses the inherent risks in intercompany obligations of fraudulent conveyance avoidance actions, along with compelling arguments for the lender to establish economic value to the transaction to satisfy Section 548.

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Outline

  1. Overview of types intercompany guaranties and integrated transactions at risk
  2. Fraudulent transfer analysis
    1. Timing of guaranty
    2. Reasonably equivalent value
    3. Financial condition of the guarantor
  3. Loans supported by intercorporate guaranties
  4. Integrated transactions and designated-use loans
  5. Best practices for lenders to establish reasonably equivalent value

Benefits

The panel will review these and other key issues:

  • How do courts interpret “reasonably equivalent” value, and will they consider indirect, intangible value?
  • How have courts applied the single integrated transaction doctrine and what kinds of transactions are at risk for courts collapsing the transactions?
  • What steps can lenders take to minimize insolvency risks inherent in intercompany guaranties and other complex lending transactions?

Faculty

Michael D. Fielding
Michael D. Fielding

Partner
Husch Blackwell

As a member of his firms’s Financial Services & Capital Markets industry team, Mr. Fielding brings...  |  Read More

Michael W. Kaufman
Michael W. Kaufman

Robinson & Cole

Mr. Kaufman is a member of the firm's Finance Group. His practice involves all aspects of secured and...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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