Report

Pitfalls in Borrowing Base Transactions

 
An "asset based" loan is often for a shorter period than a "term" loan and is secured by a borrower's assets. The loan may be backed by a single category of assets or some combination of assets. Inventory (including raw material and work in process) and proceeds (accounts receivable, chattel paper and instruments) often form the primary collateral for such loans. Real estate and equipment are less likely to be employed to secure such loans.

I. Introduction
II. Mechanics of a borrowing base
A. Introduction
B. Advances, payments and collections
C. Advances.
D. Payments and collections.
III. Legal and related structural considerations
A. Creating and perfecting the security interest
B. Fraudulent transfers
C. Effect of bankruptcy.
Annex I - Annotated Samples of "Eligible Accounts" and "Eligible Inventory" Language
Annex II - Sample borrowing base certificate
Annex III - Article 9 Uniform Provisions (UCC §§ 9-104, 9-312 & 9-314) Related to Perfection of Security Interests in Deposit Accounts
About the Author

Faculty

Lawrence R. Ahern, III

Lawrence R. Ahern, III

Brown & Ahern Attorneys at Law

Agenda

Faculty

Lawrence R. Ahern, III

Lawrence R. Ahern, III

Brown & Ahern Attorneys at Law

  • Partner in Brown & Ahern Attorneys at Law, where he and retired bankruptcy judge William Houston Brown have a national practice
  • Practice is limited to mediation and other alternate dispute resolution, legal consulting engagements by attorneys and financial professionals on issues involving bankruptcy and commercial law, expert testimony, writing, teaching and speaking
  • Adjunct professor of law at Vanderbilt, teaching secured transactions
  • Fellow of both the American College of Bankruptcy and the American College of Mortgage Attorneys, and a director of the Association of Insolvency and Restructuring Advisors
  • Listed in The Best Lawyers in America since 1989, in the categories of business reorganization, creditors' rights and bankruptcy litigation
  • Honored by various publications based on peer ratings as Best of the Bar, and similar honors
  • Writer and co-writer of numerous books and articles, and is a frequent speaker
  • Serves on the advisory board of the St. John's Law School Bankruptcy LL.M. program, and in 2002 was visiting professor at Cumberland School of Law, teaching secured transactions and banking
  • Graduated, Vanderbilt University Law School
  • Can be contacted at [email protected] or 615-579-2542

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