According to research conducted by the Commercial Finance Association, the ABL industry experienced an 11% increase in total credit commitments in 2007 -- hitting the $545 billion mark. Bank and finance company loans outstanding to corporate businesses totaled $2069 trillion at the end of 2007, according to the Federal Reserve's Flow of Funds, making the "penetration" of $545 billion of asset-based lending approximately 26% of this total in 2007. Smaller and midsize firms certainly helped to push this transition. It was exactly these customers that financing firms and midsize financial institutions initially courted. But it was the credit cycle downturn after the dot-com bust and September 11 that created an inevitable shakeup in the financing market. Despite the major turmoil in the fi...
... the "penetration" of S545 billion of assetbased lending approximately 26% of this total in 2007. T...
Despite its modest size, the Netherlands has been a cornerstone in international trade for centuries. Today, quite a few corporations have tax, historical and/or other commercial reasons for maintaining Dutch holding structures and/or operating networks in the Netherlands. Shell, Unilever, ArcelorMittal, Lyondell-Basell and Corus are examples. Asset-based lending (ABL) techniques such as factoring and secured lending are common and widely used in the Netherlands. This article provides an overview of the unique legal aspects involved in structuring an ABL facility in the Netherlands. It focuses how to grant security effectively, which priority rights may be relevant and which steps a lender should, from a Dutch perspective, take at a minimum when a customer is experiencing financial diff...
For reasons that eventually become clearer as time goes by, it starts to become obvious that many players in the marketplace use the terminology of asset based lending to mean a lot of different things, sometimes masking true capabilities for marketing purposes. One of the industry trade associations based in Europe arguably adds to the confusion, as much of its membership solely provides funding against receivables -- yet the words "Asset Based" are prominently used in this organization's name. Large corporates are not just based in the UK or North America and, multinational businesses have operating entities in many jurisdictions. The asset based lender who simply tries to replicate what they have traditionally delivered in the UK or North America is asking for a lot of trouble unless...
The last part of a series on the significant developments affecting asset-based lending is presented. In Perry v. Wolaver, the court held that Buyers had cured their default under the note when they tendered the monthly payments for June and July on Jul 21, which was within the 10-day extension of the cure period under the pledge agreement, and that Sellers' purported acceleration therefore was wrongful. In Cla-Mil East Holding Corp v. Medallion Funding Corp, the New York Court of Appeals considered Revised 9-604 of the UCC, which requires a secured party that removes collateral to promptly reimburse a property owner for damage caused by the removal of collateral. In Eastman Kodak Co v. Atlanta Retail, Inc, The conclusion of the 11th Circuit in Kodak is consistent with the notion that c...
Small commercial banks typically offer loans based on collateral such as equipment and real estate. But Fidelity Bank in Edina, Minn., has developed a niche in asset-based lending, providing companies with working capital lines of credit backed by assets such as accounts receivables and inventory. Asset-based lending tends to be higher risk, requiring strong collateral analysis skills and more management on the bank's part. Fidelity has been successful, in part, because of the long term tenure and experience of its lending staff, and the leadership of its president and CEO, Jim Morton. Starting his career as an asset-based lending business banker at Norwest Bank, Morton brought that experience to Fidelity in 1978.
The second part in a series of special reports summarizes the significant judicial developments affecting asset-based lending in 2004-2005. In Till v. SCS Credit Corp (2004), the Supreme Court held that the interest rate to be ascribed to a "cram down" installment payment provided for in a chapter 13 plan was the "formula rate," defined as the prime rate to be enhanced by a risk factor typically ranging from 1% to 3%. In United Airlines Inc v. US Bank N. A. (2005), the US Court of Appeals for the Seventh Circuit rendered a very significant decision protecting creditor interests in aircraft equipment. In JP Morgan Chase Bank v. Altos Hornos De Mex S. A . de C. V. (2004), the US District Court for the Southern District of New York held that proceeds of receivables held in a bank account i...
... the current Canadian market trends in assetbased lending, followed by a basic general overview of t...
Asset-based lending (ABL) must become more creative and innovative in order to avoid stagnation and to insure survivability. More aggressive sources of financing like hedge funds and buyout firms are eroding the traditional base of ABL. AB lenders need to change in order to keep up with competition. Within the industry, AB lenders attempt to differentiate themselves primarily on pricing terms. The majority of AB lenders follow similar credit assessment methodologies. It is very important for AB lenders to begin considering Enterprise Values. What differentiates the AB lender from the cash-flow lender is how it views the source of repayment for the loan. In all cases, the AB lender takes a security interest in the assets financed. In the end, it is change that creates opportunity. And it...
All asset-based lenders (ABL) need to evaluate their existing financing agreements, consider which borrowers are likely to restructure either outside insolvency proceedings or during insolvency proceedings and prepare for a possible enforcement of collateral. ABL in Germany has different aspects in lending to take into consideration. Unlike the US, where a lender generally may obtain a blanket security interest on existing and future personal property by using a single security agreement and a very broad description of the collateral, the German system generally requires a separate security agreement for each class of assets. Before enforcing the security, which usually leads to the insolvency of the grantor of the security, a secured lender will attempt to achieve a restructuring of th...
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