Cascading pledges are frequently used in subscription finance to avoid legal impediments, avoid tax implications and mitigate prohibited transaction risk under the Employee Retirement Income Security Act of 1974, as amended...more
An express third-party beneficiary provision running in favor of a lender in a fund’s limited partnership agreement (an “LPA”) is helpful for subscription credit facilities. It bolsters the rights and remedies of a...more
6/3/2025
/ Beneficiaries ,
Contract Terms ,
Creditors ,
Investment Funds ,
Lenders ,
Limited Partnership Agreements ,
Limited Partnerships ,
Loans ,
Private Equity ,
Private Equity Funds ,
Third-Party
EXECUTIVE SUMMARY -
Participations are increasingly being utilized in the finance industry, serving as a mechanism for lenders to manage credit exposure, diversify loan portfolios, optimize capital utilization, and...more
Subscription credit facilities, commonly referred to as “sub-lines” or “capital call facilities,” are a cornerstone of private equity finance. These facilities are secured by a bespoke collateral package that protects lenders...more
EXECUTIVE SUMMARY -
When contract language is ambiguous and the court is tasked with finding the intended meaning, interpretation principles – such as “course of performance” – may be used. But did you know this principle...more
4/9/2025
/ Borrowers ,
Breach of Contract ,
Contract Disputes ,
Contract Interpretation ,
Contract Terms ,
Dispute Resolution ,
Financial Services Industry ,
Financing ,
Lenders ,
Uniform Commercial Code (UCC) ,
Waivers
EXECUTIVE SUMMARY -
Subscription credit facilities rely on the obligations of investors to a private investment fund (“Fund”) to contribute their capital commitments to the Fund when called. From a subscription credit...more
2/26/2025
/ Breach of Contract ,
Capital Markets ,
Consumer Financial Products ,
Contract Terms ,
Credit Facilities ,
Creditors ,
Financial Services Industry ,
Investment Funds ,
Investors ,
Lenders ,
Limited Partnership Agreements ,
Loan Agreements ,
Loans ,
Private Equity ,
Private Equity Funds ,
Risk Management
EXECUTIVE SUMMARY -
Cash control provisions are critical features of any subscription credit facility, safeguarding lenders’ primary repayment sources while also potentially impacting the Fund’s cash management operations....more
Recent developments in fund finance documentation reflect a significant shift in how insurance companies are treated under assignment provisions. Traditionally, “competitor” definitions have served to restrict loan...more
EXECUTIVE SUMMARY -
As part of its Climate Accountability Package, California passed a law last year that creates disclosure requirements related to greenhouse gas (“GHG”) emissions for thousands of U.S. companies,...more
EXECUTIVE SUMMARY -
Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower’s portfolio of investments, where the amount available for borrowing is based on the value of such...more
Executive Summary -
Net Asset Value (“NAV”) credit facilities are a tool that borrowers may use to access financing based on the value of their underlying investment portfolio. The users of these facilities are generally...more
8/2/2024
/ Borrowers ,
Collateral ,
Credit Facilities ,
Financial Institutions ,
Financial Services Industry ,
Financing ,
Investment Funds ,
Investment Management ,
Investment Portfolios ,
Lenders ,
NAV ,
Private Equity Funds ,
Restrictive Covenants ,
Securities
EXECUTIVE SUMMARY -
Private equity structures often use “blockers” to achieve certain tax benefits. In this Legal Update, we explain what blockers are, how they may be used in a subscription credit facility, and what...more
Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower’s portfolio of investments, where the amount available for borrowing is based on the value of such underlying portfolio...more
EXECUTIVE SUMMARY -
In the evolving landscape of the subscription credit facility market, the introduction of fraud allegations by an investor against a fund as a new exclusion event marks a pivotal shift....more
The European Union’s new Capital Requirements Directive 6 (CRD6) introduces significant regulatory changes for non-EU banks operating within EU Member States. This update explores the impact of CRD6 on US lenders providing...more
Because banks receive favorable capital treatment when a credit facility’s tenor is shorter than one year, lenders increasingly offer financing with 364-day tenors and uncommitted extension option terms of up to 364 days. In...more
Recallable capital has become an increasingly common concept in subscription credit facilities. In this Legal Update, we explain the concept of recallable capital and its role in subscription credit facilities, as well as...more
With new banking rules on the horizon for financial institutions, lenders are looking for new strategies to bolster lending capacity and accommodate debt issuances. One such option is term debt....more
1/24/2024
/ Basel III ,
Borrowers ,
Credit Agreements ,
Debt ,
Financial Institutions ,
Financial Services Industry ,
Financing ,
Investment Funds ,
Lenders ,
Loans ,
Special Purpose Vehicles
For loans primarily secured by a cash flow stream, subscription facility lenders heavily depend on collateral accounts as a key element of the security package. In this Legal Update, we delve into why subscription facilities...more