Supply Chain Finance: Structuring and Documenting Approved Payables Financing Transactions

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


Conducted on Thursday, June 15, 2017
Recorded event now available


This CLE webinar will provide banking and loan counsel with guidance for structuring and documenting a supply chain finance (SCF) facility. The panel will discuss their insights, including the pros and cons of this alternative payment structure, as well as key issues for buyers, suppliers and investors.

Description

In seeking new ways of managing their balance sheets, companies with strong credit have found the extension of payment schedules on accounts payable can improve their cash flow and working capital. A SCF transaction facilitates timely payment by a third party to a company’s supplier, while extending the time which the company has to make payment. The investor earns income because it pays the supplier’s invoice at a discount and then collects 100% from the company at maturity.

There are structural issues associated with SCF which counsel must address upfront, including whether the supplier’s participation will be limited by competing credit agreements; how changes in interest rates or the company’s credit rating might impact the transaction; how the facility will be treated for accounting purposes; and whether the transaction will be regarded as “true sale” for bankruptcy purposes.

Listen as our authoritative panel discusses the structural issues and key documents required in a SCF. The panel will also discuss the pros and cons of these transactions for buyers and suppliers, how SCF differs from factoring, and advantages of using SCF in cross-border transactions and recent trends in SCF product.

Outline

  1. Economics of a supply chain finance facility—benefits for supplier, buyer, investor
  2. Structuring issues
    1. Competing loan obligations of supplier and buyer
    2. Interest rate fluctuations; buyer credit strength
    3. Accounting treatment
    4. Bankruptcy treatment—“true sale”
  3. Transaction documentation
    1. Paying services agreement
    2. Receivables purchase agreement
    3. Parent guaranties and other credit support
    4. UCC considerations
  4. SCF in cross-border sales transactions
  5. Blockchain
  6. Current Trends and Structures

Benefits

The panel will review these and other key issues:

  • When does SCF benefit both the buyer and its supplier?
  • How does SCF vary from factoring and other invoice and receivables finance transactions?
  • What are some of the key structuring concerns of SCF?
  • How can SCF be used to facilitate cross-border transactions?
  • What are some emerging trends and structures in the SCF space?

Faculty

Massimo Capretta, Partner
Mayer Brown, Chicago & New York

Mr. Capretta is a member of the Firm's Banking & Finance practice. His transactional practice focuses on representing both financial institutions and companies across a broad spectrum of domestic and international financing transactions. He has particular experience with domestic and cross-border trade receivables securitization, asset-based finance, factoring, supply chain/vendor finance, trade finance and other receivables monetization strategies. He regularly advises clients on the creation and management of bespoke receivables finance transactions. He has been a speaker on a number of presentations to industry participants on topics including receivables finance, asset-based lending and cross-border finance.

David A. Ciancuillo, Partner
Mayer Brown, Chicago

Mr. Ciancuillo practices banking law, with an emphasis on securitization, asset-based lending, trade and supply chain finance and other structured finance products. He regularly represents banks, borrowers, investment vehicles and other finance companies in various transactions, including asset-based lending facilities, subscription facilities, securities offerings, and the purchase and financing of trade receivables, student loans, mortgages, equipment and automobile loans, insurance related products and a variety of other assets. He has a great deal of experience in reviewing, negotiating and helping clients to create complex financing, refinancing, cross-border and investment programs, including matters relating to secured lending, global trade and supply chain finance, insurance related products, and accounting and regulatory matters. He has been a speaker and panelist on a number of presentations to industry participants on topics including accounting, regulatory, bankruptcy, cross-border finance and structuring matters.


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Banking & Finance Law Advisory Board

Irving C. Apar

Partner

Thompson Hine

Mark N. Berman

Adjunct Professor

Northeastern University

Willa Cohen Bruckner

Partner

Alston & Bird

Lawrence Kaplan

Of Counsel

Paul Hastings

Kevin Petrasic

Partner

White & Case

Laura D. Richman

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Mayer Brown

Robert M. Stern

Partner

Orrick Herrington & Sutcliffe

Andrew Stutzman

Partner

Stradley Ronon Stevens & Young

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