Asset-Based Credit Facilities in Chapter 11: Lender Options to Protect and Improve Position, Maximize Recovery

This CLE webinar will discuss practical guidance for restructuring and bankruptcy counsel to asset-based loan (ABL) lenders on the most important issues they face and how ABL lenders can actually improve their position and maximize recovery when the borrower files bankruptcy.

The collateral in an ABL is frequently inventory, accounts receivable, and the related cash proceeds. Special issues arise on both the original due diligence end and in bankruptcy when the loan is collateralized with trademarked inventory. The whole lending facility may also include term loans secured by real estate interests or equipment and guaranteed by related individuals or entities, and there may be more than one lender involved. 

The most unattractive option for debtors and creditors alike is usually straight liquidation of the collateral; however, liquidation may be the only option if the ABL borrower has engaged in fraud or other conduct that compromises the collateral. ABL lenders that fail to adequately monitor the borrower's compliance with the loan documents may find themselves in expensive litigation with other creditors and their own investors. 

In Chapter 11, the ABL lender can often obtain additional protection and priority of its interests by offering post-petition financing or obtaining creative forms of adequate protection. Careful attention must be given to realistic valuation of existing collateral and avoiding costly intercreditor disputes. 

Listen as this panel of experts discusses the unique issues facing ABL lenders when the borrower seeks bankruptcy protection and how they can maximize their recovery.