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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Tuesday, February 22, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will prepare counsel to draft and review commercial and standby letters of credit (LCs) for construction loans, permanent loans, and commercial leases. The panelist will discuss current rules of practice, including International Standby Practices 1998 (ISP98) and Uniform Customs and Practice for Documentary Credits (UCP), procedures for issuing and drawing upon LCs, and critical provisions for tailoring an LC to the transaction.

Faculty

Buddy Baker
Vice President, Investment Banking Division
Goldman Sachs Bank USA

With over 30 years of experience in international trade finance, he authored  Users’ Handbook to Documentary Credits under UCP600, Documentary Payments & Short-Term Trade Finance, and The Regulatory Environment of Letters of Credit and Trade Finance. He is actively involved in establishing national and worldwide standard practices for LCs and participated in the most recent revision of the UCP600.

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Description

Under a letter of credit, a financial institution agrees to honor a demand for payment made by a beneficiary at an applicant's request. LCs are used in various real estate transactions: to support an underlying performance obligation such as construction, or instead of cash when, for example, an escrow is required under a mortgage loan or a security deposit is required under a lease.

There are two types of LCs--commercial and standby--both follow specific rules, forms, and procedures dictated by the UCC, ISP98, or UCP. Counsel must draft and review LCs compliant with these rules and procedures and know the roles of the applicant, issuer, and beneficiary in issuing and drawing upon LCs.

Counsel should also understand the different uses for LCs and how to tailor LCs to each transaction, including expiry dates and "evergreen" clauses, whether the LC should be transferable or not transferable, and whether single or multiple draws will be permitted.

Listen as Buddy Baker, Vice President at Investment Banking Division, Goldman Sachs Bank USA discusses negotiating and drafting the critical terms in LCs and provides guidance through the annotated ISP98 forms. The panel will highlight using LCs in various real estate transactions and issues in making draws on LCs. The panel will also discuss alternative credit enhancements such as surety bonds and credit insurance and the advantages and disadvantages of each.

Outline

  1. Types of LCs: commercial vs. standby
  2. Collateral and other bank requirements for issuance
  3. LC rules and definitions
    1. UCC Article 5
    2. International Standby Practices 1998 (ISP98)
    3. Uniform Customs and Practice for Documentary Credits (UCP)
    4. Standard forms
  4. Deal-specific concerns
    1. Conditional vs. unconditional
    2. Limited (typically one year) term vs. evergreen
    3. Transferability
  5. Draw procedures

Benefits

The panelist will review these and other high priority issues:

  • What essential components should counsel include when structuring and drafting LCs?
  • What UCC requirements should counsel consider when drafting LCs?
  • What common issues arise in LC practice, and how should those issues be handled?
  • What are the potential pitfalls in choosing ISP vs. UCP, and how can counsel address these issues?