Understanding Debt Financing and Loan Transactions

Understanding Debt Financing and Loan Transactions

Debt financing is a specialized, complex area that goes to the heart of a company’s business, whether that business is real estate, low tech, or high tech. Loan transactions directly affect cash flow, and therefore are the lifeblood of any enterprise. For the lender, such as a bank, financial institution or private lender, it is critical to contain risk through careful structuring of loan documents. The lender also needs to know the pitfalls and optimal strategies if it encounters a problem loan or needs to consider whether or how to enforce its rights under loan documents, which may include foreclosing on its collateral. If a guarantor is involved, additional issues concerning scope, waiver and limitations on recourse will arise and must be properly structured and understood. On the other side of the transaction, sophisticated borrowers need to know if or in what situations the provisions in a loan document, promissory note, deed of trust or some other agreement will trigger a loan default and put the borrower at risk. And, of course, the guarantor issues mentioned above also come into play.

Strategy Law has deep expertise in all manner of debt financing, loan documentation and credit transactions, including structuring complex new debt financing transactions, securing loans with business assets, real estate assets or other unique collateral, developing creative borrowing bases, preparing complex loan documents, addressing the requirements of parties to intercreditor agreements, subordination agreements and guarantees, and addressing problem loans and workouts. This latter area may involve forbearance agreements, negotiation of restructured transactions, litigation, and representing creditors in bankruptcy.

Our experience extends to asset based loans, commercial lines of credit and term debt, venture financing, construction financing, commercial mortgage-backed securities deals and project financing.

Bankruptcy Law

Because of our work in the area of problem loans, Strategy Law has deep experience with the bankruptcy process, which it deals with strictly from a creditor’s perspective. We have represented lenders and other parties in interest seeking to enforce their rights after a bankruptcy petition is filed by a borrower, including obtaining relief from the automatic stay in bankruptcy, arguing “first day” orders, conducting evidentiary hearings and trials in bankruptcy court, defending bankruptcy preference claims, and purchasing assets out of bankruptcy.

The information appearing in this blog does not constitute legal advice or opinion. Such advice and opinion are provided by the firm only upon engagement with respect to specific factual situations. Specific questions relating to this article should be addressed directly to Strategy Law, LLP.