Positioning Investment Funds for Future Financing: Key Operating Agreement Provisions
Borrowing Authority, Ability to Make Capital Calls, Third-Party Beneficiary and Other Provisions Important to Lenders
Recording of a 90-minute premium CLE webinar with Q&A
This CLE course will examine provisions that should be included in investment fund LLC or limited partnership agreements to facilitate future financing. The panel will discuss what commercial lenders require in connection with capital call and other credit facilities, and how to structure entities that take those concerns into account.
- Advantages of including funding provisions in LLC and limited partnership agreements
- Suggested provisions
- Allow for the fund to incur indebtedness
- Allow for the fund to secure its borrowings with a pledge of capital commitments
- Allow for the managing entity to pledge to the lender the managing entity's right to call capital
- Have each investor acknowledge and agree to fund any capital calls made by a lender or to repay indebtedness
- Name lenders as third-party beneficiaries to financing provisions
- Limit conditions to investors' commitment to fund capital calls
- Make recallable capital "lender friendly"
- Commit investors to fund capital calls after the investment period
- Exit provisions that do not impede financing
The panel will review these and other relevant issues:
- Why is it important to anticipate future financing needs when drafting a fund agreement?
- What are provisions relating to the members or limited partners to include in a fund agreement to facilitate future financing?
- Why should the manager pledge its right to make capital calls? Which portions of the agreement should include a third-party beneficiary provision?
- How might exit provisions negatively impact a fund's ability to obtain financing?
Jonathan R. Rosaluk
Mr. Rosaluk is a member of the Banking & Finance practice in Mayer Brown’s Chicago office. He focuses his... | Read More
Mr. Rosaluk is a member of the Banking & Finance practice in Mayer Brown’s Chicago office. He focuses his practice on representing financial institutions, investment funds and corporate borrowers in a variety of secured and unsecured finance transactions, including subscription-backed credit facilities, bi-lateral loans, bridge loans, acquisition financing arrangements and asset-based financings. Mr. Rosaluk also has extensive experience representing both domestic and foreign issuers, underwriters, asset-backed commercial paper conduits and investors in capital markets transactions, various securitizations and other structured finance transactions in both the public and private markets, including auto loan and lease receivables, trade receivables, mortgage servicing advances and Section 4(a)(2) private placements.Close
Laura M. Watson
Ms. Watson represents lenders, investment funds, investors and corporate borrowers in both secured and unsecured... | Read More
Ms. Watson represents lenders, investment funds, investors and corporate borrowers in both secured and unsecured finance transactions, and has experience representing both borrowers and lenders in single lender, bi-lateral, and syndicated finance transactions. She focuses her practice on subscription-backed credit facilities, management fee facilities, and other fund finance matters as well as acquisition financings and asset-based financings.Close