Secured Lending Transactions: Anti-Assignment Provisions; 'Best Efforts'; 'Ordinary Course of Business'; “Business Judgmentâ€, ‘Reasonable Discretion’
Documenting UCC Security Interests in Assets Subject to Anti-Assignment Clause, Interpreting Complex Covenants
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Thursday, May 23, 2019
- schedule Time
1:00 PM E.T.
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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This CLE course will guide counsel on drafting and interpreting exclusions from collateral for contracts and other assets that are subject to restrictions on being pledged by the loan parties. This CLE webinar will also help counsel interpret loan document terms that are often not adequately understood, including "ordinary course of business," "best efforts," "reasonable best efforts," "commercially reasonable efforts", “business judgment” and “reasonable discretion.”
Commercial finance counsel must know how to draft and interpret exclusions from collateral for contracts and other assets that are subject to restrictions on assignment and/or prohibited from being pledged. UCC Article 9 has “override” language regarding such provisions that apply in certain circumstances. Counsel must recognize what UCC Article 9 "override" provisions can and cannot accomplish.
The interpretation of terms in loan documents such as "in the ordinary course of business", "best efforts" and “business judgment” can be problematic. How ordinary does the transaction have to be? How are "best efforts," "reasonable best efforts," and "commercially reasonable efforts" different? What is “business judgment”? Drafting with clarity is critical.
Listen as our authoritative panel of commercial finance attorneys offers guidance on dealing with contractual and legal restrictions on assignment and security interests in the context of secured lending. The panel will also offer practical approaches on drafting, negotiating and interpreting covenants using "best efforts", "in the ordinary course of business", “business judgment” and “reasonable discretion” contract terms.
- Interpretation of common terms in loan documents:
- Ordinary course of business
- Best efforts, reasonable best efforts, and commercially reasonable efforts
- Business judgment
- Reasonable discretion
- Dealing with contractual and legal restrictions on assignment and security interests in the context of secured lending:
- Examples of assets with restrictions on being pledged
- The UCC "override" applicable to certain assets: UCC Sections 9-406 through 408
- What the "override" does not do
- Important state variations and why they are important
- Related choice of law issues and documentation considerations
- Traps for the unwary
The panel will review these and other questions:
- How should commercial finance counsel craft "best efforts" or “business judgment” -style obligations in their agreements to reflect the intent of the parties and not promise either too much or too little?
- What are the traps for the unwary in exclusions from collateral for assets that are subject to restrictions on assignment or security interests?
- What are some ways secured lenders can structure the grant of security in assets subject to restrictions on assignment or security interests to maximize the strength of their collateral position?
