Structuring Pledge Agreements for Equity Interests in Partnerships and LLCs to Maximize Protection for Lenders

Drafting Key Provisions in the Security Agreement and Corresponding Amendments to the Borrower's Operating Agreement

A live 90-minute CLE webinar with interactive Q&A


Tuesday, June 6, 2017 (in 11 days)
1:00pm-2:30pm EDT, 10:00am-11:30am PDT


This CLE webinar will prepare lenders’ counsel to draft equity interest pledge and other agreements for partnership and LLC interests that provide maximum protection for the lender’s security interest. The panel will outline corresponding provisions that should be contained in the borrower’s operating or partnership agreement.

Description

Equity interests in LLC and partnership interests are a common form of collateral in many secured finance transactions, particularly mezzanine financing. The security agreement and related documents are important for the effectiveness of the security interest in an LLC or partnership equity interest.

Critical provisions that protect the lender’s interests include the choice of the LLC or partnership to opt-in to UCC Article 8. Representations, warranties and covenants of security agreements are often different than standard provisions for other collateral.

Listen as our authoritative panel of practitioners discusses UCC Article 9 and Article 8 requirements for equity interests in LLC or partnership interests. The panel will outline best practices for drafting pledge agreements and making corresponding amendments to the borrower’s operating agreement that maximize protection for the lender.

Outline

  1. Overview of UCC Article 8 and 9 requirements
  2. Drafting the security agreement
  3. Recommended amendments to the LLC operating agreement or partnership agreement
  4. Common pitfalls and strategies to best protect the lender

Benefits

The panel will review these and other key issues:

  • Why is the UCC Article 8 opt-in and perfection by “control” preferable to perfection by the filing of a financing statement under Article 9?
  • What steps should the lender take to ensure the borrower cannot opt-out of Article 8?
  • What are the key provisions that should be included in the borrower’s operating agreement or partnership agreement to facilitate realization on the collateral?
  • To what extent may the lender use the operating or partnership agreement to prevent the borrower from commencing a bankruptcy case to block the lender’s enforcement?

Faculty

Howard M. Berkower, Partner
McCarter & English, New York

Mr. Berkower's practice focuses on corporate transactions from the initial planning stages, negotiation and drafting of the legal documents to deal conclusion keyed to the organization’s strategic and financial goals. He structures, negotiates, executes and implements private equity and venture capital investments, merger and acquisitions, capital raising activities including public offerings and private placements, fund formation and loan and debt financings. He is a frequent public speaker on corporate-securities matters and authored articles published in several leading magazines and has been quoted in newspapers on cutting-edge developments in corporate and securities matters.

Edwin E. Smith, Partner
Morgan, Lewis & Bockius, New York and Boston

Mr. Smith concentrates his practice in commercial law, debt financings, structured financings, workouts, bankruptcies, and international transactions. He is particularly knowledgeable on commercial law and insolvency matters, both domestic and cross-border. His representations have included those in major bankruptcies including Lehman and the City of Detroit. Mr. Smith often advises financial institutions on documentation and risk management issues.

Steven O. Weise, Partner
Proskauer Rose, Los Angeles

Mr. Weise practices in all areas of commercial law and has extensive experience in financing, especially in those secured by personal property, including structured financing. He is regarded as one of the foremost authorities on Article 9 of the UCC. He is a member of the Permanent Editorial Board for the UCC and a member of the American Law Institute’s UCC Article 9 Drafting Committee. Mr. Weise is also the past chair of the American Bar Association’s Business Law Section Legal Opinions Committee.


Live Webinar

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This webinar is eligible for at least 1.5 general CLE credits.

CLE credits are not available for PR.

*In KS, OH, PA, for more than 1 attendee on the connection you must contact Strafford CLE via email or call 1-800-926-7926 ext. 35 prior to the program for special instructions.


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Customer Reviews

Program did a great job distinguishing the differences between Art 8 and Art 9 equity interest and effects plus practical ways to improve intercreditor agreements and considerations.

Craig Moore

AmericanWest Bank

I appreciated the tips regarding language needed in pledge and LLC agreements.

Alan Schacter

Allen & Overy

Strafford's program was lively and interesting.

Julie Zando-Dennis

Carroll McNulty Kull

Great information from all the speakers.

Nick Mackris

Kelly Services - Employee Screening Dept

Excellent topics, discussed very well.

McClure King

Dearborn National

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Banking & Finance Law Advisory Board

Irving C. Apar

Partner

Thompson Hine

Mark N. Berman

Partner

Nixon Peabody

Willa Cohen Bruckner

Partner

Alston & Bird

Lawrence Kaplan

Of Counsel

Paul Hastings

Kevin Petrasic

Partner

Paul Hastings

Laura D. Richman

Counsel

Mayer Brown

Robert M. Stern

Partner

Orrick Herrington & Sutcliffe

Andrew Stutzman

Partner

Stradley Ronon Stevens & Young

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