Cross-Collateral/Cross-Default Loans: Structuring and Documenting Transactions
Intercreditor Agreements, Priority Disputes, Enforcement Challenges Post-Default or Bankruptcy

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Tuesday, February 4, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will instruct finance counsel on structuring and documenting cross-collateral/cross-default first and second lien financing transactions. The panel will discuss best practices for negotiating intercreditor agreements to protect the rights of both primary and secondary lien lenders and minimize priority disputes, and how to safeguard liens in the event of borrower default or bankruptcy.
Faculty

Mr. Schulwolf is a partner in Shipman's Business and Corporate Practice Group. He focuses his practice on advising clients in financing, investment, acquisition, and restructuring transactions. In the Finance sector, Mr. Schulwolf regularly represents financial institutions including banks, mezzanine funds, and other institutional investors in structuring, documenting, and closing complex senior and mezzanine financings, including mezzanine financings with equity co-investments. He regularly represents lenders in connection with acquisition financings, financing of alternative energy projects (including wind, solar, and fuel cell projects), asset-based loans, cash flow loans, and syndicated credit facilities and he also represents Shipman's corporate clients and private equity portfolio companies in their financing transactions.

For nearly 40 years, Mr. Wurst has been a nationally recognized leader in the commercial finance community where he has represented large and small banks and commercial lenders as well as family-owned businesses providing sound advice and counselling on both legal and business matters. He is widely recognized for his hands on representation in commercial finance and bankruptcy matters. Mr. Wurst is skilled in his handling and supervising of complicated as well as routine debt finance transactions and is regularly called upon to handle loan workouts, asset-based lending, factoring, syndications, leasing and C&I, as well as bankruptcy matters, and turnaround situations stemming from transactions. He is called upon to provide advice to emerging finance companies. Mr. Wurst has spent a lifetime representing lenders and borrowers in both federal and state insolvency proceedings, including debtor-in-possession financing, disputed use of cash collateral, assignments for benefit of creditors and secured party sales under Article 9 of the Uniform Commercial Code. He is a fellow of the American College of Commercial Finance Lawyers and a panelist on the American Arbitration Association’s National Roster of Arbitrators.

Dr. Manzer is a partner in the Banking & Specialty Finance Group and Business Law practice. She has developed expertise in a wide range of practice areas combining skills to work effectively in most corporate/commercial practice areas, with a focus on financial services and structured transactions. Dr. Manzer's recent experience includes block chain and fintech applications. Her cross-border expertise has led to several leadership roles in leading U.S. business law organizations such as the American College of Commercial Finance Lawyers and the American Bar Association. Dr. Manzer has written many books on legal topics, primarily in areas of banking and specialized finance, and routinely lectures and speaks on a wide range of topics.
Description
Cross-default and cross-collateralization provisions can wreak havoc after a borrower's default or bankruptcy. Counsel must draft such provisions with care, taking into account the competing goals and lien positions of senior and junior lenders.
Counsel for junior lenders must carefully evaluate cross-collateralization provisions in senior loans and protect the junior lender with an intercreditor agreement. Counsel for senior lenders, likewise, need to carefully consider the intercreditor agreement to protect rights established in the senior loan documents.
Key provisions of the intercreditor agreement include a definition of common collateral, standstill periods, "free release" clauses, indebtedness caps, limitations on borrowing base advances, and drag, along with lien release, purchase options, rights as an unsecured creditor, and insolvency provisions.
Listen as our authoritative panel of finance practitioners guides you through the structuring and documentation of cross-collateral/cross-default financing transactions, negotiation of intercreditor agreements, and best practices for protecting liens post-default or bankruptcy.
Outline
- Structuring and documenting cross-collateralization and cross-default loans
- Key provisions of the intercreditor agreement
- Definition of common collateral
- Standstill periods
- Structuring indebtedness caps
- "Free release" and drag along with lien release
- Purchase options
- Rights as an unsecured creditor
- Insolvency provisions
- Enforceability of cross-collateral provisions after default
- Enforceability of cross-collateral provisions in bankruptcy
Benefits
The panel will review these and other key issues:
- Best practices for senior lenders to maximize the effectiveness of a cross-collateral/cross-default provision in the senior loan
- How can junior lenders avoid being squeezed out by cross-collateralization in the senior lender's lien?
- Negotiating the intercreditor agreement to minimize lender priority disputes
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