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

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.
This program is included with the Strafford All-Access Pass. Click for more information.

Wednesday, January 11, 2023

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

Early Registration Discount Deadline, Friday, December 16, 2022

or call 1-800-926-7926

This CLE course will enable finance counsel to structure a 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 the borrower's existing and after-acquired inventory and other assets, the loan balance is paid down as inventory is sold and can be redrawn to finance the production or acquisition of new inventory. Counsel must draft draw and repayment procedures with care.

The secured party will want a perfected security interest that takes priority over other security interests or other interests in the inventory. For a perfected security interest, there must be both creation and attachment of the security interest under a security agreement and perfection by filing a UCC financing statement, taking possession of the collateral, or some other method.

Competing security interests and liens can add complexity to the transaction. Generally, the time of filing establishes priority, but there are notable exceptions to the first to file rule, including manufacturers, other suppliers, or lenders with a purchase money security interest (PMSI). Counsel may wish to identify and address competing security interests and liens in loan and intercreditor agreements.

Listen as our authoritative panel examines issues particular to the financing of inventory. The panel will discuss critical provisions that 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 competing security interests or other interests in the collateral.

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Outline

  1. UCC treatment of inventory and other goods
  2. Documenting a revolving line of credit secured by inventory or other goods
    1. Loan agreement advance and repayment provisions
    2. Security agreement
    3. UCC financing statement
  3. UCC perfection and priority: searching and filing, possession or other methods
  4. Maintaining a security interest in proceeds
  5. Competing security interests and liens
    1. PMSIs
    2. Consigned inventory (both to and from the borrower)
    3. Landlord 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

Shareholder
Baker Donelson

Mr. Cianciotti helps banks, other commercial lenders, and borrowers structure, negotiate and close secured loan...  |  Read More

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Early Discount (through 12/16/22)

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Early Discount (through 12/16/22)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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