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

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


Conducted on Tuesday, June 6, 2017

Recorded event now available

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Program Materials

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.

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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

Curtis A. Johnson
Curtis A. Johnson

Partner
McCarter & English

Mr. Johnson advises clients with respect to complex financings and other business and capital transactions,...  |  Read More

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

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