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Structuring Secured Lending Transactions: Identifying Property the Debtor Does Not Own and Dealing with Restrictions on Assignment

Interpreting Best Efforts, Ordinary Course, Business Judgment, Reasonable Discretion

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Thursday, June 27, 2024

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This CLE webinar will discuss drafting and interpreting exclusions from collateral for assets that are subject to restrictions on being pledged by the loan parties. The speaker will also discuss the Article 9 rules that override restrictions on assignment.

Description

Many commercial lenders expect to obtain a security interest in all the borrowers' assets. But often there are unanticipated problems. Some important assets might be owned by a related party, perhaps even a party of which the lender is unaware. Some assets might be subject to a statutory or constructive trust. Most important, some important assets are likely to be subject to a legal or contractual restriction on assignment, and that restriction might impede attachment of enforcement of a security interest.

This program will explore these issues by highlighting common traps and the due diligence and drafting techniques to avoid them. The program will delve into Article 9's rules that override restrictions on assignment, explaining to what assets the rules apply, to what assets the rules do not apply, and the extent to which the rules can be relied upon.

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Outline

  1. Identifying property the debtor does not own
    1. Property owned by a related party
    2. The undisclosed partnership
    3. Statutory trusts
    4. Constructive trusts
  2. Dealing with restrictions on transfer
    1. Legal restrictions
    2. Contractual restrictions
    3. UCC overrides
    4. Caveats

Benefits

The speaker will review these and other questions:

  • What are the traps for the unwary in exclusions from collateral for assets that are subject to restrictions on assignment or security interests?
  • What are the Article 9 rules that override restrictions on assignment?

Faculty

Sepinuck, Stephen
Stephen L. Sepinuck
Special UCC Advisor
Paul Hastings

Professor Sepinuck began his career practicing law and after a few years became a full-time academic in 1989. He...  |  Read More

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