Secured Financing of Inventory: Revolving Credit, UCC Perfection, Proceeds, Competing Liens

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


Conducted on Tuesday, May 1, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will enable finance counsel to structure revolving credit financing where inventory is the collateral. The panel discussion will include attachment and perfection under the UCC, ensuring a continuing interest in proceeds upon sale, and how best to establish priority over competing security interests.

Description

Lenders making asset-based loans often include a borrower’s inventory as part of the borrowing base. Structured as a line of credit secured by a lien on the inventory and other assets, the loan balance is paid down as inventory is sold and can be redrawn to finance new inventory. Counsel must draft draw and repayment procedures with care.

The secured party will want a perfected security interest that takes priority over security interests in the inventory. For a perfected security interest there must be both creation of the security interest under a security agreement and perfection either by filing a UCC financing statement or taking possession of the collateral. The security agreement and financing statement must be clear that the perfected security interest covers proceeds of sale or other disposition.

Competing liens can add complexity to the transaction. Generally, the time of filing establishes priority, but there are important exceptions to the first to file rule, including buyers without knowledge of the security interest and manufacturers with a purchase money security interest (PMSI). Counsel must be able to identify and address competing liens in loan and intercreditor agreements, and must be certain in the name and filing location of the debtor.

Listen as our authoritative panel examines issues particular to the financing of inventory. The panel will discuss key provisions which should be included in the documentation of a revolving line of credit, perfecting and maintaining a first priority security interest in inventory, and dealing with lenders with competing security interests in the collateral.

READ MORE

Outline

  1. UCC treatment of inventory and other goods
  2. Documenting a revolving line of credit secured by inventory or other goods
    1. Promissory note advance and repayment provisions
    2. Security agreement
    3. UCC financing statement
  3. UCC perfection: filing, possession
  4. Maintaining a security interest in proceeds
  5. Competing liens
    1. PMSIs
    2. Consigned Inventory (both to and from the borrower)
    3. Landlord’s Liens
    4. Warehouseman’s Liens
    5. Processor’s Liens

Benefits

The panel will review these and other critical issues:

  • What are the crucial components of a revolving line of credit when financing inventory?
  • How is a UCC security interest perfected in inventory, and in proceeds after a sale?
  • What steps should counsel take to ensure priority over PMSI and other competing liens?

Faculty

Smith, Edwin
Edwin E. Smith

Partner
Morgan, Lewis & Bockius

Mr. Smith concentrates his practice in commercial law, debt financings, structured financings, workouts, bankruptcies,...  |  Read More

Weise, Steven
Steven O. Weise

Partner
Proskauer Rose

Mr. Weise practices in all areas of commercial law and has extensive experience in financing, especially in those...  |  Read More

Cianciotti, Anthony
Anthony C. Cianciotti

Senior Counsel
McGuireWoods

Mr. Cianciotti represents banks and other financial institutions in single-lender and syndicated commercial debt...  |  Read More

Other Formats
— Anytime, Anywhere

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:

CLE On-Demand Video

$297

Download

$297