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Structuring and Documenting Subscription Facilities

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

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Conducted on Thursday, October 21, 2021

Recorded event now available

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This CLE course will discuss the structuring of subscription credit facilities, with a focus on partnership agreement provisions that provide financing flexibility, defining borrowing base and exclusion events, loan covenants particular to subscription facilities, and lender remedies. The panel will also discuss certain aspects of fund structures that drive loan agreement terms and related costs.


Subscription facilities serve various purposes, from financing acquisitions to giving a fund the flexibility to issue letters of credit or enter into hedging transactions. The prevalence of adoption of subscription facilities by funds demonstrates their benefits, and practitioners who structure subscription facilities with balanced consideration for the competing interests of sponsors, investors, and lenders are most likely to achieve a win-win execution of the transaction.

A lender will typically require that investors be bound by certain "bankable" provisions, most commonly contained in the fund's governing documents, but in some limited instances "investor letters" are still required. The lender will ultimately want investors to, among other things, acknowledge the lender's right to make capital calls and waive any setoff rights, counterclaim, or other defenses and to fund capital contributions to a deposit or securities account pledged to the lender as collateral.

One of the most important components of a subscription facility is the "borrowing base" which is a calculation of available capital commitments, multiplied by the advance rate and dictates how much a fund is able to borrow. Other key representations and covenants likewise relate to the uncalled investor commitments, and terms under which they can be transferred, modified or reduced, as well as the ability of the borrower to incur additional debt, pledge collateral in support, or make distributions to limited partners.

For both lenders and fund borrowers, it is important to understand the implications of UCC Article 9 and 8 on security interests in subscription line collateral and the role of non-UCC remedies in fund finance structures.



  1. General structure and uses of a subscription facility
  2. What are common "bankable" provisions and the effect of side letters?
  3. When are investor letters still employed?
  4. Ins and outs of subscription line borrowing bases
  5. What are some common representations and covenants unique to subscription line loan documents?
  6. What are the benefits and limitations of perfecting liens under the UCC?
  7. What are some common drivers of cost?


The panel will review these and other critical issues:

  • How can a subscription facility benefit a fund and its investors?
  • What kinds of conditions or circumstances that might be considered exclusion events are in defining the borrowing base?
  • What investor reps and warranties are considered standard in subscription facilities?
  • How is UCC perfection achieved in a subscription credit facility?


Martinez, Javier
Javier E. Martinez

Haynes Boone

Mr. Martinez’ primary focus is in representing lenders and some borrowers in secured transactions at all stages...  |  Read More

McGinnis, Ellen
Ellen Gibson McGinnis

Haynes and Boone

Ms. McGinnis is recognized for her critical thinking in structuring, and practical advice in execution of, financing...  |  Read More

Sysel, Jan
Jan Sysel

Fried Frank Harris Shriver & Jacobson

Mr. Sysel represents sponsors, borrowers, arrangers and lenders on a wide variety of financing transactions primarily...  |  Read More

Go, Flora
Flora Go

Fried Frank Harris Shriver & Jacobson

Ms. Go represents investment management firms, investment banks, private equity sponsors and other financial...  |  Read More

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