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Negative Pledge Clauses in Loan Agreements

Learn to dissect typical negative pledge provisions and understand the importance of these provisions along with the competing concerns of lenders and borrowers. Negative pledge clauses, i.e., clauses that restrict a borrower from granting a security interest in, or permitting a lien, on the borrower's assets in favor of a third party, are common in loan agreements. Yet there has not been much commentary on the purpose, nature and effect of these clauses so critical to the decision of a lender to extend credit to a borrower. After learning this information, you will benefit from a much deeper understanding of these clauses and will be better prepared to negotiate them and use them to the advantage of lender or borrower clients.


Runtime: 92 minutes
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Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

What Are Negative Pledge Provisions and Where Are They Found?

  • Common Examples of Negative Pledge Provisions in Loan and Security Agreements
  • Typical Carve Outs From Negative Pledge Provisions
  • How Do Negative Pledge Provisions Tie in With Ancillary and Related Provisions in Loan and Security Agreement and Other Agreements
  • Hidden Negative Pledge Provisions

Why Do Lenders Want Negative Pledge Provisions?

  • Problems Caused by Second Liens in the Enforcement of Creditors Rights
  • Problems Caused by Subordinate Liens in the Bankruptcy Context

What Are the Consequences for the Borrower and Others If There Is a Breach of a Negative Pledge Provision?

  • Defaults and the Borrower's Ability to Cure
  • Defaults Under Other Agreements, Such as Guaranties

Helpful Hints in Drafting and Documenting Negative Pledge Provisions

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Why Lorman?

Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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OnDemand Webinar

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

Audio & Reference Manual

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Kenneth C. Kettering

Kenneth C. Kettering

Professor Kenneth C. Kettering

  • Lecturer in Law, Columbia University School of Law; formerly partner in the Pittsburgh office of Reed Smith Shaw & McClay
  • Writes on and teaches primarily commercial and debtor-creditor law
  • Reporter for the 2014 amendments to the Uniform Fraudulent Transfer Act (renamed the Uniform Voidable Transactions Act)
  • Participant in numerous law revision projects, including the 2010 amendments to Revised Article 9 and the 1998 revision of Article 9
  • Consultant to the Permanent Editorial Board for the Uniform Commercial Code on forthcoming official commentaries relating to Article 9
  • Author of numerous articles on commercial and debtor-creditor law, most recently The Uniform Voidable Transactions Act; or, the 2014 Amendments to the Uniform Fraudulent Transfer Act, 70 Bus. Law 777 (2015)
  • Member, American College of Commercial Finance Lawyers, American Law Institute
  • J.D. degree, magna cum laude, Harvard Law School; B.S. degree, with University Honors, Carnegie-Mellon University
  • Can be contacted at [email protected]
Edwin E. Smith

Edwin E. Smith

Morgan, Lewis & Bockius LLP

  • Partner, Morgan, Lewis & Bockius, LLP, New York City, NY
  • Concentrates practice on commercial law and insolvency representing lenders and other creditors in domestic and cross-border transactions
  • Uniform Law Commissioner for the Commonwealth of Massachusetts and, in that capacity, participant in various drafting committees including the drafting committees for the 1995 revisions to Uniform Commercial Code (UCC) Article 5, the 1999 revisions to UCC Article 9, the 2002 amendments to UCC Articles 3 and 4 (chair), the 2010 amendments to UCC Article 9 (chair), and the 2014 amendments to the Uniform Fraudulent Transfer Act (renamed the Uniform Voidable Transactions Act)(chair)
  • Member of the Permanent Editorial Board for the Uniform Commercial Code
  • Former U.S. delegate the United Nations Commission on International Trade Law working group on secured transactions
  • Lecturer in law at various universities including most recently the Morin Centre for Banking Law Studies at Boston University School of Law
  • Wrote numerous articles and co-wrote two text books on commercial and debtor-creditor law; contributing author to Colliers on Bankruptcy
  • Member, American College of Commercial Finance Lawyers, American Law Institute, American College of Bankruptcy and International Insolvency Institute
  • J.D. degree, Harvard Law School; B.A. degree, Yale University
  • Can be contacted at [email protected]
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Product ID: 399618
Published 2017
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