An Expert's View: Excess Availability in Asset-Based Lending
December 21, 2015
The Practical Law Company recently did a market survey of excess availability thresholds for 48 asset-based credit agreements filed with the SEC dated between October 1, 2014 and October 31, 2015, with deal values in a range of $50 million to $750 million, and including various industries.
In connection with the survey, The Practical Law Company asked David Morse of Otterbourg, P.C., chair of the banking and finance practice, to provide An Expert’s View: Excess Availability in Asset-Based Lending.
In the article he discusses the use of excess availability in credit agreements, including different methods to calculate it, the use of “qualified cash” and “suppressed availability”, common areas of negotiation related to excess availability in defining “payment conditions”, the various provisions in a credit agreement where excess availability thresholds are used and the rationale behind the structure of such uses.
Please click here to read the article on the nuanced, yet critical, challenges that confront asset-based lenders in looking to excess availability.