Asset-Based Lending: Navigating Borrowing Base, Article 9 Collateral Issues, Key Provisions

In asset-based financing transactions, the lender lends up to a percentage of the value of the borrower's assets--the borrowing base. Assets used in ABL financing typically include accounts receivables, inventory, and equipment. The speakers will also focus on unique issues with cash in the borrowing base and whether lenders are including intellectual property in the borrowing base.

ABL lending frequently involves extensions of credit to borrowers representing a higher degree of credit risk than other types of commercial lending. As a result, ABL loans include features such as cash management and a perfected security interest in all collateral is typically required.

Listen as our authoritative panel of finance attorneys discusses structuring and documenting asset-based financing transactions, including those with senior and junior lenders. The panel will review critical issues associated with different assets in the borrowing base, obtaining and perfecting a security interest in the assets, and essential terms in ABL loan documentation.

1. Types of ABL facilities
2. Borrowing base
   1. Account receivables
   2. Inventory
   3. Equipment
   4. Cash
3. Obtaining and perfecting a security interest in assets under UCC Article 9
4. Loan documentation
   1. Reserves and dilution
   2. Reporting
   3. Conditions precedent to drawing on the revolver
   4. Cash management
   5. Financial covenants in ABL deals
   6. Split collateral intercreditor agreements
5. The impact of the current financial market on borrowing base deals

The panel will review these and other relevant issues:

• Critical issues with different assets in the borrowing base
• Obtaining and perfecting a security interest in the assets under UCC Article 9
• Cash management provisions and deposit account control agreement in ABL loan documentation
• Split collateral intercreditor agreements