Structuring Revolving Credit Facilities: Draw Provisions, Swingline Financing, Lender Liability Concerns

Recording of a 90-minute premium CLE video webinar with 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.

Conducted on Thursday, April 21, 2022

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE webinar will guide finance counsel on the structuring and documentation of revolving credit facilities. The panel will discuss draw mechanisms and other key provisions and the potential legal ramifications for lenders who fail to fund under the credit agreement. The panel will also discuss swingline loans and how they relate to the facility as a whole.

Description

A revolving loan facility allows borrowers to draw down, repay, and draw funds again throughout a set loan term. Proceeds are generally used for working capital needs and other corporate purposes. Revolving facilities are essentially an ongoing loan commitment, often involving multiple lenders, with each lender agreeing to provide its pro-rata share of the funds requested.

Central to a revolving credit agreement are draw provisions which govern how a borrower may request funds under the facility. At a minimum, they should include required documentation in a draw request, require confirmation that no default exists at the time of the borrowing, and require a borrower certification that certain representations and warranties in the credit agreement remain true and correct.

Failure to fund upon a valid request could result in claims of breach not only from the borrower but from the other lenders. Lenders must understand in advance any potential grounds for a refusal to fund (including financial deterioration of the borrower) and the possible consequences of such a decision, significantly where the funds disbursed might exceed the value of the secured lenders' collateral.

Swingline loans are often made available as a component of a revolving credit facility to give the borrower more rapid access to funds (at higher pricing). The swingline lender is obligated to make swingline loans within its revolving credit commitment limit. The revolving facility documents should include swingline loan terms and conditions and how those fundings fit into the facility as a whole.

Listen as our authoritative panel discusses the nuances of revolving credit facilities.

READ MORE

Outline

  1. Revolving credit characteristics
    1. Ability to draw, repay, and draw again subject to the credit limit
    2. Term, use of funds
    3. Multiple lenders: syndicated deals
    4. Types of revolving facilities
  2. Swingline loans
  3. Negotiating and drafting draw provisions
  4. Lender liability for failure to fund
  5. Collateral and priority issues

Benefits

The panel will review these and other vital issues:

  • What are the typical uses of revolving credit facilities, and what type of borrower seeks revolving credit?
  • How are multiple lender deals structured?
  • What are the key terms to include in the draw provision?
  • When can a lender decline to fund a draw request, and how can it mitigate against potential claims for failure to fund?
  • What is a swingline loan, and when might it be included in the revolving credit facility?

Faculty

Hicks, Tim
Tim Hicks

Partner
Cadwalader Wickersham & Taft

Mr. Hicks’ practice focuses on fund finance, and he has significant experience negotiating and documenting...  |  Read More

Schulwolf, James
James C. Schulwolf

Partner
Shipman & Goodwin

Mr. Schulwolf represents senior and mezzanine lenders, venture capital investors (including SBIC’s), private...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download