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
Subscription credit facilities usually require the ability to make, receive, and enforce capital calls on a pro rata basis, whether directly or indirectly through a cascading pledge structure, on 100% of the pool of capital...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