Supply Chain Finance: Structuring and Documenting Approved Payables Financing Transactions
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Thursday, September 10, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will provide banking and loan counsel with guidance for structuring and documenting a supply chain finance (SCF) facility. The panel will discuss their insights, including the pros and cons of this alternative payment structure, as well as critical issues for buyers, suppliers, and investors.
Mr. Martinez represents lenders and borrowers in complex cross-border finance transactions. His practice covers a broad spectrum of contexts, including project finance, acquisition finance, and general working capital facilities, as well as trade finance by means of letters of credit, pre-export credit facilities, and the purchase and sale of trade receivables. Most of these transactions have involved leveraged borrowers and thus have benefited from some form of credit support, whether in the form of a guarantee, letter of credit, derivative, a security interest in pledged property, or additional sponsor or parent company support.
Mr. Novetsky represents financial institutions, sponsors and specialty lenders in asset securitization, secured lending, and global trade finance transactions. He represents several money center banks in loan asset programs with middle-market commercial lenders. Many of the transactions in Mr. Novetsky’s practice involve international companies and cross-border issues. He also has extensive experience in healthcare finance transactions, representing several of the sector's most active lenders. Mr. Novetsky has also represented senior lender groups in restructurings, including bankruptcy debtor-in-possession and exit facility programs.
Mr. Redinger’s practice focuses on corporate finance, mergers and acquisitions, structured finance, derivatives transactions, and cross border and international transactions. He has extensive experience and a particular interest in working with early and late stage entrepreneurs in both start-up and life-cycle transactions. Mr. Redinger has also advised funds, private equity, institutional investors and financial institutions and has completed listings in several international markets including the London Stock Exchange and the Irish Stock Exchange. He was previously in-house counsel and strategic advisor to a synthetic GIC platform in the U.S. and an internal advisor to several projects in the structured debt market including regulatory capital and distressed assets.
In seeking new ways of managing their balance sheets, companies with stable credit have found the extension of payment schedules on accounts payable can improve their cash flow and working capital. An SCF transaction facilitates timely payment by a third party to a company's supplier while extending the time which the company has to make payment. The investor earns income because it pays the supplier's invoice at a discount and then collects 100% from the company at maturity.
There are structural issues associated with SCF, which counsel must address upfront. These include whether the supplier's participation will be limited by competing credit agreements, how changes in interest rates or the company's credit rating might impact the transaction, how to treat the facility for accounting purposes, and whether the deal will be regarded as "true sale" for bankruptcy purposes.
Listen as our authoritative panel discusses the structural issues and key documents required in an SCF. The panel will also discuss the pros and cons of these transactions for buyers and suppliers, how SCF differs from factoring, the advantages of using SCF in cross-border transactions, and recent trends in SCF products.
- Economics of a supply chain finance facility: benefits for supplier, buyer, investor
- Structuring issues
- Competing loan obligations of supplier and buyer
- Interest rate fluctuations; buyer credit strength
- Accounting treatment
- Bankruptcy treatment: "true sale"
- Blockchain
- Transaction documentation
- Paying services agreement
- Receivables purchase agreement
- Parent guaranties and other credit support
- UCC considerations
- SCF in cross-border sales transactions
- Current trends and structures; fraud concerns
The panel will review these and other key issues:
- When does SCF benefit both the buyer and its supplier?
- How does SCF vary from factoring and other invoice and receivables finance transactions?
- What are some of the key structuring concerns of SCF?
- How can SCF be used to facilitate cross-border transactions?
- What are some emerging trends and structures in the SCF space?
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