BarbriSFCourseDetails
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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Thursday, June 15, 2023

  • 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 lender's counsel to draft pledge and other agreements that establish a security interest in partnership and LLC interests. The panel will outline corresponding provisions to include in the borrower's operating or partnership agreement to maximize protection for the lender and discuss the application of UCC Articles 8 and 9 to the perfection and priority of the security interest.

Faculty

Edwin E. Smith
Partner
Morgan, Lewis & Bockius LLP

Mr. Smith concentrates his practice in commercial law, debt financings, structured financings, workouts, bankruptcies, and international transactions. He is particularly knowledgeable on commercial law and insolvency matters, both domestic and cross-border. His representations have included those in major bankruptcies including Lehman and the City of Detroit. Mr. Smith often advises financial institutions on documentation and risk management issues.

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Steven O. Weise
Partner
Proskauer Rose LLP

Mr. Weise practices in all areas of commercial law and has extensive experience in financing, especially in those secured by personal property, including structured financing. He is regarded as one of the foremost authorities on Article 9 of the UCC. He is a member of the Permanent Editorial Board for the UCC and a member of the American Law Institute’s UCC Article 9 Drafting Committee. Mr. Weise is also the past chair of the American Bar Association’s Business Law Section Legal Opinions Committee.

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Description

Equity interests in LLC and partnership interests are a common form of collateral in many secured finance transactions, particularly mezzanine financing. The security agreement and related documents are fundamental in establishing a security interest in an LLC or partnership interest.

Representations, warranties, and covenants in the pledge and security agreement are often different than standard provisions for other collateral. The agreement must also address the rights being pledged, including economic, voting, and management rights.

The UCC provides two distinct paths to perfect the lender's security interest: filing a financing statement under Article 9 and/or taking possession or control of the interest using the opt-in provisions of Article 8. Counsel should understand the advantages and disadvantages of each.

Listen as our authoritative panel outlines best practices for drafting security agreements and making corresponding amendments to the borrower's operating agreement or partnership agreement to maximize the lender's protection. The panel will also discuss UCC Articles 8 and 9’s requirements for the perfection and priority of a security interest in a member or partnership interest. The discussion will include the amendments to UCC Sections 9-406 and 9-408 promulgated in 2018 by the American Law Institute and the Uniform Law Commission as well as planning opportunities in anticipation of the 2022 UCC amendments becoming effective.

Outline

  1. Overview of UCC Articles 8 and 9 requirements
  2. Drafting the security agreement
  3. Recommended amendments to the LLC operating agreement or partnership agreement
  4. Common pitfalls and strategies to best protect the lender

Benefits

The panel will review these and other key issues:

  • Why is the UCC Article 8 opt-in and perfection by possession or "control" preferable to perfection by filing a financing statement under Article 9?
  • What steps should the lender take to ensure the borrower cannot opt out of Article 8?
  • What are the key provisions to include in the borrower's operating agreement or partnership agreement to facilitate the realization of the collateral?
  • To what extent may the lender use the operating or partnership agreement to prevent the borrower from commencing a bankruptcy case to block the lender's enforcement?