Cross-border loan transactions are becoming more prevalent between the U.S.
and certain foreign jurisdictions that are
conducive to asset-based lending. Some
of the issues and challenges that need
to be taken into consideration when
dealing with foreign borrowers/guaran-tors and cross-border lending are highlighted above. These issues can affect
the overall viability of a loan structure.
While undoubtedly other issues will
arise in this context, addressing some
of the concerns above at the forefront
of a deal can help finalize the structure
of the deal, aid in the drafting process,
minimize the cost of the transaction and
minimize the credit risk or exposure to a
secured lender. TSL
Elizabeth R. Khoury is an associate in
Morgan Lewis’s Business and Finance
Practice. Ms. Khoury represents leading
financial institutions and corporate
borrowers in a variety of domestic
and international commercial finance
transactions. Her practice is primarily
focused on syndicated debt financings,
asset-based financings and multinational
credit facilities, ESOP loan transactions,
mezzanine financings and other strategic
financings across a variety of industries
and business sectors. Ms. Khoury also has
experience in domestic and international
loan workouts and restructurings. Morgan
Lewis provides comprehensive litigation,
corporate, transactional, regulatory,
intellectual property, and labor and
employment legal services to clients of all
sizes—from globally-established industry
leaders to just conceived start-ups.
Christopher L. Exberger, of counsel in the
Finance & Restructuring group of Morgan
Lewis, and Kenneth S. Kail, partner in the
Tax group of Morgan Lewis, contributed to
Copyright 2013. Morgan, Lewis & Bockius
LLP. All Rights Reserved.
This article is provided as a general
informational service and it should not be
construed as imparting legal advice on any
1. I.R.C. § 956 (2012) and the related
Treasury Regulations; see also Paul R.
Hoffman, Cross-Border Lending, 126
BANKING L.J. 367, 368 (2009).
2. Richard L. Goldfarb, Homage to
Draconia: Enforcement Lessons to
Consider Before You Rely on Foreign
Collateral, 66 CONSUMER FIN. L.Q.
REP. 298 (2012).
3. Hoffman, supra note 1, at 373.
4. U.C.C. § 9-408(a) (2012).
6. Richard M. Kohn, Further Reflections
on International Asset-Based Lending,
55 THE SECURED LENDER 26, 34 (1999).
7. Richard M. Kohn & David M. Morse,
Shoring up Distressed Cross-Border
Loans, 65 THE SECURED LENDER 31, 33
8. Richard M. Gray & Cecilio Castillero,
Collateral Allocation Mechanisms
(‘CAMs’) Spread Risk in Global Credit
Facilities, 25 BUTTERWORTHS J. OF
INT’L BANKING AND FIN. L. 454 (2010).