TSL October 2017

Representing the Asset-Based Financing, Factoring & Supply Chain Finance Industries Worldwide October 17

THE MIDDLE MARKET ISSUE

Disruption:

The Way Forward for Middle-Market Companies P.12 ALSO IN THIS ISSUE

Middle Market as “Perfect Link” in the Supply Chain P.16 The Retail Apocalypse: A Survival Guide P.18 Blockchain: Are We There Yet? P.22 Refinancing the Borrower Through an Assignment and Assumption: When, Why, and How (Part 2) P.30 Taking the Pulse of Retail Lending P.26

TSL INTERVIEW

ANDREA

PETRO PAGE 34

DEPARTMENTS

Collateral THE CFA BRIEF What Would You Do? Legal Notes BONUS INSERT: THE 73RD ANNUAL EXHIBITOR GUIDE P.41

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ACCOUNTING | TAX | CONSULTING

Representing the Asset-Based Financing, Factoring & Supply Chain Finance Industries Worldwide

Volume 73, Issue 8

October 17

FEATURES 12 Disruption: The Way Forward for Middle-Market Companies Michael C. Slocum discusses the results of Capital One Commercial Bank’s recent survey of more than 300 senior middle-market executives. How is this group preparing to identify and respond to disruption? By Michael C. Slocum

16 Middle Market as “Perfect Link” in the Supply Chain: An Opportunity for Lenders

Thomas A. Stewart of the National Center for the Middle Market (NCMM), located at The Ohio State University Fisher College of Business, discusses NCMM’s collaboration with the Council of Supply Chain Management Professionals (CSCMP) to explore the key behaviors, barriers and opportunities facing mid-size suppliers. By Thomas A. Stewart

12 18 The Retail Apocalypse: A Survival Guide

Technology continues to transform the retail industry and reshape the way many businesses in that sector are funded and financed. Subscription-based companies, in particular, have forced lenders to rethink not only their offerings, but their overall approach. Eric Bader of Rosenthal & Rosenthal discusses the rise of the “Subscription Economy” and why lenders should pay attention.

By Eric Bader

22 Blockchain: Are We There Yet?

Despite (or maybe because of) its roots in hacker and crypto-anarchist circles, blockchain technology has captured the imagination of businesses worldwide. Since it enables companies to work from a single, distributed ledger, this innovation holds great promise for maximizing efficiencies and increasing trust. By Phil Gomes and Tony Smith

34 18 26 Taking the Pulse of Retail Lending

Joseph Nemia, Head of Asset-Based Lending, TD Bank, provides an overview of the ever-changing retail sector.

By Joseph Nemia

30 Refinancing the Borrower Through an Assignment and Assumption: When, Why, and How (Part 2)

In Part 2 of this two-part series Jason I. Miller continues to focus on key provisions typically found in an assignment and assumption agreement. By Jason I. Miller

34 The TSL Interview: Andrea Petro Reflects on Her Tenure as CFA President

Petro updates readers on CFA’s recent accomplishments and reflects back on her career. By Michele Ocejo

DEPARTMENTS 6

Letter From Richard D. Gumbrecht, CEO of the Commercial Finance Association, discusses the ways that CFA is “bringing together the resources that make capital work.”

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Collateral The latest issues affecting the ABL and factoring industries, including company news and personnel announcements.

38

What Would You Do? In this edition of What Would You Do?, Overadvance Bank is being paid out of a distressed loan and, as part of the payoff, the Chief Credit Officer is asked to accept cash, rather than a letter of credit, to collateralize existing letters of credit issued by the Bank for the account of the distressed borrower. By Dan Fiorillo and Jim Cretella

40

Legal Notes In this issue, CFA’s Co-General Counsel discuss a recent Third Circuit ruling that analyzes certain nonuniform UCC provisions dealing with security interests in oil and gas. By Jonathan Helfat and Richard Kohn, CFA Co-General Counsel

41

CFA Annual Convention Exhibitor Guide A preview to the suppliers to the asset-based lending and factoring industries who will be exhibiting at CFA’s 73rd Annual Convention in Chicago, November 8-10.

51

The CFA Brief 51 60 61 64

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Among CFA Members Chapter Spotlight CFA Chapter News Calendar

Advertisers Index

STAFF & OFFICES Michele Ocejo Editor-in-Chief & CFA Communications Director Eileen Wubbe Senior Editor Aydan Savaser Art Director

Editorial Offices 370 Seventh Avenue Suite 1801 New York, NY 10001 (212) 792 -9390 Fax: (212) 564-6053 Email: tsl@cfa.com Website: www.cfa.com

Advertising Contact: James Kravitz Business Development Director T: 646-839-6080 jkravitz@cfa.com

The Commercial Finance Association is the trade group for the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, floor plan financing organizations, factoring organizations and financing subsidiaries of major industrial corporations.

The objectives of the Association are to provide, through discussion and publication, a forum for the consideration of inter- and intra-industry ideas and opportunities; to make available current information on legislation and court decisions relating to asset-based financial services; to improve legal and operational procedures employed by the industry; to furnish to the general public information on the function and significance of the industry in the credit structure of the country; to encourage the Association’s members, and their personnel, in the performance of their social and community responsibilities; and to promote, through education, the sound development of asset-based financial services.

The opinions and views expressed by The Secured Lender’s contributing editors and authors are their own and do not necessarily express the magazine’s viewpoint or position. Reprinting of any material is prohibited without the express written permission of The Secured Lender.

The Secured Lender, magazine of the asset-based financial services industry (ISSN 0888-255X), is published 9 times per year (Jan/Feb, March, April, May, June, July, September, October and November) $65 per year non-member rate, and $100 for two years non-member rate, CFA members are complimentary, by Commercial Finance Association, 370 Seventh Avenue, New York, NY 10001. Periodicals postage paid at New York, NY, and at additional mailing offices.

Postmaster, send address changes to The Secured Lender, c/o Commercial Finance Association, 370 Seventh Avenue, New York, NY 10001.

a

letter from THOUGHTS FROM CFA AND TSL STAFF

s the newly appointed CEO of the Commercial Finance Association, I am excited about the future of our vibrant Association and our industry. I look forward to working with all of you to help enable our success and deliver on our mission of ‘bringing together the resources that make capital work’. I believe strongly that as an association and an industry, we are more impactful when we are closely aligned and working toward common goals.

The CFA is a community that thrives by embracing the contributions and talents of all our members. To that end, CFA just hosted its first Women in Commercial Finance Conference, presented by the Women in Commercial Finance Committee. The Conference kicked off with a networking reception at Paul Hastings in New York City. The next day substantive panels were held at the offices of Wells Fargo, featuring Sallie Krawcheck.

The inaugural event brought together some of our industry’s leading female executives and employment professionals to offer their insights and tips on navigating issues faced in today’s work environment.

Great communities constantly renew

themselves, and on September 28th we gathered to honor our next generation of leaders at CFA’s 2017 40 Under 40 Awards recipients. The memorable celebration was held at The Pierre Hotel in New York, featuring keynote speaker Peter Schwab, former chairman of Wells Fargo Capital Finance, and past chair of CFA. Nominations for the 2018 40 Under 40 Awards will open in February.

If you haven’t registered yet for CFA’s 73rd Annual Convention, the program book deadline is October 11. We have a robust agenda lined up, featuring speakers Tom Ricketts, chairman and owner of the Chicago Cubs, and Ellen Alemany, chairwoman and CEO of CIT Group as well as what should be an unforgettable Opening Reception at the Chicago House of Blues with blues legend and Grammy-Award winner, Buddy Guy. Panel topics include financial technology and cybersecurity, managing multiple generations in the workplace and private debt placement. We’ll also hold our firstever Funding Exchange for buyers and sellers of secured loans.

In this issue, we feature an industry giant who played an integral part in CFA’s success this year as she has throughout her career. Recently, she was instrumental in the creation of the CFA 40 Under 40 Awards program as well as the Women in Commercial Finance Conference. Turn to page 34 for the TSL Interview with CFA’s 2017 president, Andrea Petro, executive vice president, Wells Fargo Capital Finance.

On page 12, Michael C. Slocum of Capital One discusses how middle-market executives are preparing to identify and

respond to disruption and provides the results of Capital One Commercial Bank’s recent survey of more than 300 senior middle-market executives.

In Middle Market as “Perfect Link” in the Supply Chain: An Opportunity for Lenders, Thomas A. Stewart of the National Center for the Middle Market (NCMM) discusses NCMM’s collaboration with the Council of Supply Chain Management Professionals to explore the key behaviors, barriers and opportunities facing mid-size suppliers on page 16.

On page 18, Eric Bader of Rosenthal & Rosenthal discusses the rise of the “Subscription Economy” and why lenders should pay attention.

On page 26, Taking the Pulse of Retail Lending, by Joe Nemia of TD Bank, offers another view of this ever-changing sector.

Blockchain technology has captured the imagination of businesses worldwide. Don’t miss Blockchain: Are We there Yet? on page 22, by Phil Gomes and Tony Smith.

In Part 2 of a two-part series, Jason I. Miller of Otterbourg continues to focus on key provisions typically found in an assignment and assumption agreement, and contrasts an assignment and assumption against a traditional payoff in Refinancing the Borrower Through an Assignment and Assumption: When, Why, and How, page 30.

I hope to see you at one (or more) of CFA’s upcoming events to get to know each other, hear what’s on your mind, understand what we can do together to strengthen this vital and dynamic community and build the foundation for CFA’s future growth.

“The CFA is a community that thrives by embracing the contributions and talents of all our members. To that end, CFA just hosted its first Women in Commercial

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Finance Conference, presented by the Women in

Warm regards,

Commercial Finance Committee.”

Richard D. Gumbrecht CFA CEO

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collateral INDUSTRY NEWS

THE INDUSTRY IN BRIEF

Express Trade Capital, Inc. Announces Establishment of Eco-Financing Division Express Trade Capital, a leader in the Trade Finance, Factoring, Purchase Order Financing and Logistical solutions arena, has recently established an ECOFinancing division. The announcement was made by Mark Bienstock – managing director. The division will be led by Ashley Orlando – vice president.

“The ECO- Financing marketplace is experiencing tremendous growth and we will be a leader in providing customized financing solutions for this everexpanding marketplace,” commented Mark Bienstock. With dynamic and experienced executive Ashley Orlando leading this division, Express has quickly established themselves as the “go-to financier” for the needs of the ECO marketplace. This arena encompasses industries such as Clean-Label Food & Beverage, Natural Health & Beauty, Sustainable Apparel & Home Furnishings, etc. Express is also able to consider “seed financing” for these companies in order to assist them in moving to the next level of growth. For further information, contact: Ashley Orlando VP – 212-997-0155 – ashley@expresstradecapital.com

Otterbourg Expands Finance Practice with Hiring of Jason Miller in NY Otterbourg P.C. announced that Jason I. Miller has joined the firm as a member in the specialty finance group. His practice focuses on commercial finance matters such as asset-based lending, cash flow lending, middle-market, factoring, leveraged finance, first and second lien loans and term loans. He joins Otterbourg from Blank Rome LLP. Miller represents many leading institutional lenders, including major national and international commercial banks, finance companies, private equity groups, mezzanine lenders and indepen-

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dent factors.

“Jason has a strong practice and is a perfect fit for our specialty finance group,” said Richard L. Stehl, Otterbourg’s chairman. “He is smart, energetic and well connected throughout the finance community and has deep experience in a wide range of lending areas that will be a valuable asset to our lending and corporate clients.”

Miller added, “I have worked alongside Otterbourg on numerous representations and have always been impressed by the talent and character of the firm’s lawyers. This move is a great opportunity to grow my practice at a firm that specializes in my areas of expertise and has an exceptional reputation.”

Miller is a frequent lecturer and author on financial topics. His most recent article, “Refinancing the Borrower Through an Assignment and Assumption: When, Why and How”, ran this spring in The Secured Lender. He earned his J.D. from Hofstra University School of Law and has a B.A. and an M.A. in political science from Long Island University. Super Lawyers has named him to its list of New York Rising Stars the past three years.

Otterbourg P.C. offers clients a unique combination of legal insight and practical solutions and is known for its integrity, legal expertise, stability and business knowledge. The firm, established more than 100 years ago, regularly represents clients in matters of national and international scope, including banks, finance companies, hedge funds, private equity firms, real estate investment firms, corporate clients and high net-worth individuals. The firm’s practice areas include domestic and cross-border financings, litigation and alternative dispute resolutions, real estate, restructuring and bankruptcy proceedings, mergers and acquisitions and other corporate transactions, and trusts and estates.

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Wells Fargo Names Holly Kaczmarczyk Head of Supply Chain Finance Group Wells Fargo Capital Finance, part of Wells Fargo & Company (NYSE: WFC), named Holly Kaczmarczyk head of the Supply Chain Finance Group and her expected transition will take place in Q4.

In her role, Kaczmarczyk will be working closely with clients to offer working capital solutions that address the financing needs of corporations and their supply chain partners to help improve growth, mitigate risk and improve cash flow across a broad range of industries, both domestically and internationally.

She will be based in Charlotte, NC and report to David Marks, head of Wells Fargo Capital Finance.

“Supply Chain Finance is critical to our clients and a key part of the Capital Finance business. I’m thrilled to have Holly lead this important, fast growing business and terrific group of team members,” said Marks. “Holly’s international experience and previous leadership roles in the asset-based industry positions her well to lead our global Supply Chain Finance team as we continue to serve the needs of our clients.”

Prior to this role, Kaczmarczyk was chief executive officer of Wells Fargo’s Irish banking subsidiary and was based in Dublin, Ireland. She joined Wells Fargo in 2002 and has held leadership roles across its Wholesale Banking Group, including senior leadership roles in Wells Fargo Capital Finance.

Wells Fargo Capital Finance is the trade name for certain asset-based lending services, senior secured lending services, accounts receivable and purchase order finance services, and channel finance services of Wells Fargo & Company and its subsidiaries, and provides traditional asset-based lending, specialized senior and junior secured financing, accounts receivable financing, purchase order financing and channel

Bibby Financial Services Announces Strategic Sales Organizational Changes Bibby Financial Services (BFS) has announced strategic organizational changes to its U.S. sales team to support continued business growth and create greater synergies across its asset-based lending, factoring and transportation finance offerings. Daniel Rodrigue, who rejoined BFS in April 2017 as national head of sales for Factoring and Transportation Finance, is now National Head of Sales, overseeing all three business

segment sales teams. Rodrigue will continue reporting directly to Ian Watson, CEO of Bibby Financial Services in North America.

BFS veterans Blake Kennedy and Brian Albach have been promoted to newly created roles as Regional Sales Managers for the Southeast and Midwest, respectively, reporting to Rodrigue.

More business development officers have been appointed to the existing sales team to increase regional presence throughout the U.S.: Northeast (Pennsylvania), Midwest (Illinois and Texas), South (Alabama and Georgia), and West (California). The business development officers for Southeast and Midwest will report to Kennedy and Albach, their respective regional sales managers.

“These appointments boost our sales teams, support our business strategy and strengthen our proposition in the alternative financing market,” said Ian Watson. “BFS is making significant strides across all business lines with new client funding up 60% in the second quarter and client retention rates at an all-time high. This new sales structure will ensure that we are able to maintain and build on that momentum with a strong integrated sales team dedicated to the success of our clients and delivering the financial solutions they need.”

Bibby Financial Services is a leading independent financial services partner to more than 10,250 businesses worldwide, providing more than $1.25 billion in funding annually and handling $11.6 billion in annual client turnover globally.

With over 44 operations in 13 countries spanning Europe, North America and Asia, it provides asset-based lending and factoring solutions to help businesses grow in domestic and international markets. Established in 2001, Bibby Financial Services North America has seven offices in the U.S. and Canada that support businesses in virtually any industry. It holds memberships in the Commercial Finance

Association, the International Factoring Association, and the American Finance Association. Bibby Financial Services is part of Bibby Line Group (BLG), a diverse and forward-looking family business with over 200 years’ experience of providing personal, responsive and flexible customer solutions. www.bibbyusa.com or www.bibbycanada.ca.

INDUSTRY NEWS

finance to companies across the United States and internationally. Dedicated teams within Wells Fargo Capital Finance provide financing solutions for companies in specific industries such as retail, software and hi-tech, healthcare, commercial finance, staffing, government contracting and others. wellsfargocapitalfinance.com Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 271,000 team members, Wells Fargo serves one in three households in the United States.

Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

PineBridge Hires Three to Form New Middle-Market Direct Lending Business PineBridge Investments has brought former Business Development Corp. of America executives Jim Fisher, Joe Taylor and Doug Lyons aboard its credit platform to form the nucleus of its new middle-market direct lending business.

The trio will focus primarily on U.S.-based middle-market companies seeking capital for growth, acquisitions, leveraged buyouts and recapitalizations, PineBridge said in a statement. The private credit team will be based in New York and led by Fisher.

The new direct lending effort will expand PineBridge’s existing $28.5 billion credit platform, which currently includes bank loan CLOs, high-yield investments and a junior capital-focused structured capital business. Fisher and his team have successfully built and led other middle-market direct lending platforms over the last 25 years, most recently at Business Development Corp of America.

“Jim and his team are highly regarded in the private credit world and have numerous long term relationships with sponsors, intermediaries and lenders,” said PineBridge CEO Greg Ehret in the statement. “They will be a great addition to our existing credit platform.”

Headquartered in New York, PineBridge is majority-owned by a subsidiary

THE SECURED LENDER OCTOBER 2017 9

INDUSTRY NEWS

collateral

of Pacific Century Group, an Asia-based private investment group. The company is a global asset manager with experience in emerging and developed markets offering multi-asset, fixed income, equity and alternatives strategies to institutions, insurance companies and intermediaries, and managed $85.5 billion as of 30 June 2017.

Santander Appoints Regional Head of Middle-market for NY, NJ Santander Bank announced it has appointed Ellen Marshall to regional head of middle-market for New York and New Jersey in its commercial banking division.

In this role, Marshall will be responsible for managing the bank’s middlemarket business in New Jersey, Manhattan and Long Island. Marshall has more than 30 years of experience in these markets. She will report to Bob Rubino, co-president and head of commercial banking.

“Ellen’s extensive commercial banking experience and knowledge of serving middle-market companies will help to enhance our position in the marketplace. We’ve made significant investments in our Commercial Banking division by strengthening our teams and product offerings to better serve our clients and Ellen’s appointment is part of our strategy to build upon the progress we’ve made to grow this important business,” Rubino said.

Prior to Santander, Marshall was at Capital One as its regional market executive for the New York metropolitan area.

Before that, she was managing director for information services and technology at CIT Group. She was formerly the New Jersey commercial market president at Santander, formerly Sovereign Bank, from 2002 to 2007.

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She will be based at the bank’s New York City office.

Cesar Gueikian Joins Monroe Capital to Launch a Special Situations Credit Strategy Monroe Capital LLC (Monroe) announced Cesar Gueikian has joined the firm as a managing director and co-portfolio manager. Together with managing director Aaron Peck, he will lead the firm’s new special situations credit strategy and manage the Monroe Capital Special Situations Credit Fund. The new business strategy will focus on origination-driven, senior and asset-based private debt, and secondary special situations with an emphasis on principal protection.

“We are very excited to add Cesar to the Monroe team,” said Ted Koenig, president and CEO of Monroe Capital.

“Cesar has an accomplished career of over 18 years in special situations credit and I am pleased to have him co-lead our effort in this area. Launching the new special situations credit strategy is a natural evolution for Monroe’s growth to expand its private credit business and offer our limited partners the ability to get unique exposure to the opportunistic and special situation asset-based credit space. Adding this synergistic business puts Monroe at the forefront of private credit, allowing our investors unique access and exposure to the entire spectrum of private credit solutions.”

“I am very excited to partner with the Monroe team,” said Cesar Gueikian. “It is hard to find such a unique team that has significant credit experience across many business cycles and that has been very successful working together as a single unit in the same business for almost twenty years. Monroe has the most qualified teams of originators, underwriting and due diligence, operations,

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legal, and investor relations that I have come across. I am very excited to be part of the Monroe family and to help grow the business,” added Cesar.

Prior to Monroe, Cesar was a founder and managing partner of Melody Capital Partners, a New York-based alternative asset manager focused on private debt and secondary investing. Prior to Melody, he was at UBS from 2009 until 2012 as the Global Head of the Special Situations Group. His responsibilities included overseeing all structured and private lending. He was also Head of UBS Leveraged Finance Capital Markets for EMEA starting in 2010. His responsibilities included Leveraged Loans and High Yield Bonds across a variety of transaction structures including acquisition and bridge financings, refinancings, and recapitalizations, working primarily with private equity sponsors and their portfolio companies. While at UBS, Cesar co-chaired the Global Investment Committee, was a member of the European Management Committee, and a Significant Influence Function delegate on behalf of UBS with the Financial Services Authority in London. Prior to UBS, he headed Illiquid Credit Trading for North America at Merrill Lynch. Cesar began his career at Deutsche Bank, where he focused on credit analysis, corporate valuation, capital structure, waterfall, and fundamental analysis.

Cesar earned his B.A. in business from Universidad de San Andres, Buenos Aires, Argentina and his M.B.A. from The University of Chicago with a concentration in analytical finance and economics.

Monroe Capital LLC (Monroe) is a middle-market direct lending and private credit asset management firm. Since 2004, the firm has provided private credit solutions to corporate borrowers in the U.S. and Canada. Monroe’s middle-market lending platform provides senior and junior debt financing to middle-market businesses and private equity sponsors.

“Mike Reilly brings the experience, proven track record and an extensive network to the PUBCAP - ABL group, which will support our efforts to build and grow our Connecticut and NY Metro business,” said Mike Maiorino, executive vice president, People’s United Business Capital.

People’s United Bank, N.A. is a subsidiary of People’s United Financial, Inc. (NASDAQ: PBCT), a diversified financial services company with over $43 billion in assets. People’s United Bank, founded in 1842, is a premier, community-based, regional bank in the Northeast offering commercial and retail banking, as well as wealth management services through a network of over 400 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine.

Michael Reilly Joins People’s United Bank as Senior Vice President, Business Development Officer for People’s United Business Capital

Houlihan Lokey Adds Seasoned Veteran to its Financial Advisory Services Business

People’s United Bank announced that Michael J. Reilly has joined People’s United Business Capital (PUBCAP) as senior vice president, responsible for new business originations in the Connecticut, Westchester and Long Island regions.

Reilly will be based in White Plains.

Reilly brings more than 20 years of secured lending experience to PUBCAP. His prior roles include various portfolio and underwriting positions with Sterling National Bank, Citibank, UBS and GE Capital. He also served as a business development officer with Santander, covering the New York middle-market.

Reilly is an active member of CFA, TMA, and ACG in New York and Connecticut. He received a bachelor’s degree in Economics from Trinity College and an MBA with a concentration in Finance from Babson Graduate School of Management.

Houlihan Lokey, Inc. (NYSE:HLI), the global investment bank, announced that James G. Wolf, CFA, has joined the Tax & Financial Reporting Valuation (TFR) practice within Financial Advisory Services as a managing director. He is based in New York.

Prior to joining Houlihan Lokey, Wolf spent nearly 30 years at EY, where he held a number of roles, including serving as a market leader for its Valuation and Business Modeling Group, a U.S. Fairness Opinion Leader, and a managing partner for its Center for Strategic Transactions.

“Jim’s track record of advising CEOs, CFOs, and boards around the world during his long career at EY is outstanding,” said Jack Berka, global head of financial advisory services. “He has worked on nearly every type of valuation or strategic finance engagement, including acquisitions and sales, reorganizations and recapitalizations, privatizations,

purchase price allocations, and many others, and we could not be more excited to add his expertise and leadership to the TFR platform,” he added.

“I’m excited to join a leading independent investment bank that combines a unique culture, global footprint, and truly comprehensive service offering with Houlihan Lokey’s TFR practice,” said Wolf.

“Adding an officer of Jim’s caliber will substantially enhance the exceptional client service we deliver to clients and contribute meaningfully to the growth of the practice. We look forward to introducing Jim to our client base as we continue to build our market-leading Tax & Financial Reporting Valuation capabilities,” said Tomasz Stefanowski, managing director of the firm’s New York TFR practice.

Wolf holds a B.B.A. from the University of Notre Dame and an MBA from the University of Texas, Austin. He is also a Chartered Financial Analyst and Senior Member of the American Society of Appraisers.

INDUSTRY NEWS

Investment types include unitranche financings; cash flow, asset based and enterprise value based loans; and equity co-investments. Monroe is committed to being a value-added and user-friendly partner to business owners, senior management and private equity sponsors.

The firm is headquartered in Chicago and maintains offices in Atlanta, Boston, Dallas, Los Angeles, New York, San Francisco and Toronto. Monroe has been recognized by Private Debt Investor as the 2016 Lower Mid-Market Lender of the Year; M&A Advisor as the 2016 Lender Firm of the Year; Global M&A Network as the 2016 Small Middle-markets Lender of the Year; and the U.S. Small Business Administration as the 2015 Small Business Investment Company (SBIC) of the Year.

THE SECURED LENDER OCTOBER 2017 11

Disruption

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The Way Forward for Middle-Market Companies

By Michael C. Slocum Michael C. Slocum discusses the results of Capital One Commercial Bank’s recent survey of more than 300 senior middle-market executives. How is this group preparing to identify and respond to disruption?

THE SECURED LENDER OCTOBER 2017 13

There is nothing new about technology and globalization driving changes in business, dooming long-established companies and spawning new ones.

Fifty years ago, a company on the S&P 500 stayed for 33 years, on average. Today, approximately half the companies currently on the list are expected to be replaced over the next ten years.

Without question, the pace of change is accelerating, driven in part by startups that disrupt entire industries. However, despite popular wisdom, start-ups are not the only disruptors. Apple was a mature, 30-year-old company when it introduced the iPhone. These enterprises share a willingness to envision a future that is different from the present, rewrite their business plans accordingly, and dedicate capital to support their disruptive strategy.

In this volatile environment, middlemarket companies—those with annual revenues between $100 million and $3 billion—can feel besieged from all sides, threatened by nimble start-ups and industry giants alike. Although these pressures are indeed real, middle-market companies can turn disruption to their advantage. While resource constraints can make them an object of disruption, their size can provide the agility they need to adapt and even become agents of disruption themselves.

The middle-market response to disruption will have a significant impact on the economy. The nearly 20,000 U.S.-based middle-market companies employ more than 30 million people and produce approximately $10 trillion of the $30 trillion in annual gross receipts generated nationwide.

Capital One’s Commercial Bank surveyed more than 300 senior middlemarket executives to determine how they have prepared to identify and respond to disruption, as well as any plans to engage in disruptive strategies themselves.

We found a broad range of attitudes and strategies to cope with disruption. For example, companies that are focused on introducing disruptive strategies themselves often give defen-

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sive measures short shrift. Many have also failed to arrange for the financial resources needed to withstand a disruptive attack. With 75 percent of respondents reporting that they will require additional capital to remain competitive in the event of an industry disruption, it has become especially critical for middle-market companies to have a financial partner capable of offering a broad spectrum of services.

Middle-Market Companies Appear Unfazed by Disruption, Leaving Them Vulnerable As a group, these executives are acutely aware that their business may be disrupted. Fifteen percent have already faced a disruptive event that had a material impact on their finances, while an additional 73 percent expect to experience a disruption of this magnitude within the next three years.

Different industries anticipate different sources of disruption. For instance, companies in transportation, logistics, and distribution see the Internet of Things—the wireless network of sensors embedded in everyday objects allowing them to send and receive information— as their greatest concern. Not surprisingly, those in apparel and retail worry about the influence of social media on consumer choice, while manufacturers are concerned about robotics. A few sources of disruption, such as big-data analytics, transcend specific industry segments.

We also found that many middle-market executives hold seemingly contradictory views on disruption. Forty-three percent believe their industry is quite or extremely vulnerable to disruption.

However, they are far less worried about its effects on their own companies; just 18 percent reported that their company is quite vulnerable to disruption. These executives see the coming storm, but expect it to hit their competitors only.

While some executives assume they will not be impacted by the coming changes, we expect that most fall into a second group—executives who are optimistic because they see disrup-

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tion as primarily an opportunity for their company, not a threat. Indeed, 60 percent said their companies are actively pursuing a disruptive strategy.

In fact, the more vulnerable they feel, the more likely they are to be pursuing a disruptive strategy of their own. Eightyfive percent of those who feel quite or extremely vulnerable have launched disruptive strategies.

For most middle-market companies, the old adage applies: the best defense is a good offense. However, we found that many companies adopt this approach without also mounting an adequate defense. Fifty-five percent of those who see disruption as an opportunity consider themselves only slightly prepared for potential disruption, and 11 percent of respondents declared they hadn’t done anything at all.

We also found that the response to disruption correlates highly with company size. Companies with revenues between $2 billion and $3 billion are much more likely to see a disruptive event as an opportunity, whereas smaller middlemarket companies are not. Those larger companies are more likely to have prepared for a disruptive event by creating contingency plans and purchasing interruption insurance. In addition, half the companies in this group have increased their R&D budgets by 11 to 25 percent in the past year alone. These companies are likely to be pursuing a disruptive strategy of their own that could lead to a competitive advantage.

The contrast with smaller companies—those with revenues between $100 million and $499 million—is striking. They are more likely to view disruption as a threat, primarily because they have difficulty mustering the financial resources needed for mounting a defense. For instance, they often lack essential banking relationships. If confronted by a disruption, these smaller companies would be in jeopardy.

Disruptors and Delayers Our research identified two clear groups with diametrically opposed approaches to disruption —we dubbed them disrup-

tors and delayers. Success in the face of disruption requires both preparation and proactivity. Disruptors are those who are quite or extremely prepared for disruption and are pursuing a disruptive strategy. They constituted 16 percent of the respondents. Financial services and insurance companies are archetypical disruptors.

By contrast, 30 percent of respondents are delayers—that is, they are unprepared for a disruptive event and are not pursuing a disruptive strategy.

Energy, resources, and chemicals companies tend to be classic delayers.

Here again, company size jumps out as a differentiator. Just three percent of small middle-market companies are disruptors, while 44 percent are delayers.

By contrast, 27 percent of large middlemarket companies are disruptors, while only 13 percent are delayers.

Strategies to Help Middle-Market Firms Navigate a Disruptive Environment How can delayers and smaller middlemarket companies better position themselves for success in a disruptive environment? The first and perhaps the most obvious step is to deploy a set of defensive measures. Delayers are particularly lax in creating a contingency plan, purchasing interruption insurance and implementing regular firewall testing.

Companies at risk of disruption also need to marshal their financial resources. Although middle-market companies overwhelmingly recognize the need for financial support, a significant portion of our respondents—32 percent—said they lack a banking relationship capable of supporting their companies in case of disruption.

Disruptors are more forward-looking in their preference for financial partners.

For them, financial institutions remain the preferred source of funding. They look to them for access to private equity as well as asset-based lending and asset securitization. The delayers and the smaller companies, on the other hand, are more likely to consider alternatives such as peer-to-peer lending and crowdfunding. We believe that to increase

their readiness to confront disruption, middle-market companies should look for stable, established financial partners that offer a broad and evolving selection of services and have a deep understanding of their specific industries.

Investment in R&D should also be on a middle-market company’s checklist, to create opportunities to launch offensive measures while strengthening defensive capacity. The survey found a positive correlation between access to capital and a company’s R&D strategy; those with strong banking relationships are most likely to have increased their R&D budgets by between 11 and 25 percent.

Finally, a good offense—while not an adequate substitute for defensive measures—is an excellent complement to them. Middle-market companies need not develop disruptive technologies themselves; they can simply incorporate disruptive digital tools or partner with companies that have introduced them.

Disruptors embrace this strategy.

Nearly three-fifths of disruptors welcome digital tools, compared to two percent of delayers. Disruptors are much more inclined, for instance, to have adopted a disruptive financial service, and they also embraced online and mobile payments. We recommend that small firms and delayers would do well to follow the lead of disruptors in strengthening their companies by adopting disruptive technologies.

their R&D spending, and adopt disruptive strategies can create and exploit a competitive advantage. A key element of this strategy is access to capital. Finding the right financial partner—one that is capable of offering a broad spectrum of services—is a critical step for middlemarket companies as they prepare for the inevitable disruptions that are reshaping the business landscape. TSL As president of Capital One’s Commercial Banking business, Michael Slocum is responsible for leading multiple broad lines of business, including Commercial Real Estate, Middle Market Banking, Commercial & Specialty Finance, Capital Markets, Treasury Services, and Wealth and Asset Management. Slocum reports to Rich Fairbank, Capital One’s Chairman and CEO. Slocum is a member of Capital One’s Executive Committee and also serves as the company’s Northeast Regional President.

He resides in New York City and is a graduate of Colgate University with a degree in economics.

Strong Financial Partnerships Can Ensure Survival It’s a view widely shared across the modern business landscape: disruption is a fact of life. Globalization and the advent of new technologies have made new and unorthodox business models possible, lowering costs and creating efficiencies that are transforming once-staid industries. Middle-market companies are often targets of disruptors, but their size can provide the nimbleness needed to be disruptors themselves—but only if they make sure their defenses are in place.

Companies that deploy contingency plans and other defenses, increase

THE SECURED LENDER OCTOBER 2017 15

Middle Market as

“Perfect Link” in the Supply Chain: An Opportunity for Lenders

BY THOMAS A. STEWART Thomas A. Stewart of the National Center for the Middle Market (NCMM), located at The Ohio State University Fisher College of Business, discusses NCMM’s collaboration with the Council of Supply Chain Management Professionals (CSCMP) to explore the key behaviors, barriers and opportunities facing mid-size suppliers.

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Supply chain management is not simply a way to hold down costs and keep operations running smoothly, but a path to a competitive advantage by satisfying customers with greater value, innovation and speed—a path that financial services providers can help to pave.

While what big companies do to manage their supply chains is commonly known, it has been difficult to assess the capabilities and behaviors of the Tier One, Two and Three suppliers who are links in those chains. These suppliers are pivotal; they provide raw materials, parts and services, like distribution and fulfillment. Many of these suppliers are mid-size businesses, which tend to be privately held enterprises.

As a result, there has been little data about the best practices of these firms.

However, recent research points to middle-market companies, which represent annual revenues between $10 million and $1 billion, as being a “perfect link” in the supply chain. The middle market, which accounts for one-third of private GDP and employment, consists of approximately 200,000 companies across the U.S. It includes about 40 percent of the U.S. manufacturing base. Therefore, it would behoove lenders to become more acquainted with the middle market, especially to understand how to support their critical role in the nation’s supply network.

Links in the Chain To determine what makes suppliers a “perfect link,” the National Center for the Middle Market (NCMM), located at The Ohio State University Fisher College of Business, collaborated with the Council of Supply Chain Management Professionals (CSCMP) to explore the key behaviors, barriers and opportunities facing mid-size suppliers.

The organizations surveyed 400 middlemarket executives throughout the U.S. that primarily manage the supply function and work directly with other manufacturers, which supply component parts, provide value-added services or perform additional manufacturing processes.

What did the study show? Some key findings include: ◗ They go deep with a few customers. Top performing suppliers have a less-diversified customer base than their peers. That

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seems risky, but they develop deeply collaborative relationships that start at the leadership level and extend down through the organizations. This results in frequent communication, joint planning and continuous improvement. Nearly half (44 percent) of the fastest-growing suppliers reported that they are their customer’s sole source of the product or service they offer.

They focus on core capabilities. The majority of fast-growing suppliers (61 percent) use third-party logistics providers to assist with functions, such as warehousing, transportation and customs brokerage. Additionally, other aspects of supply chain management – like data management and security, as well as supply chain planning – are increasingly outsourced.

The more they learn, the better they do. Approximately half of the suppliers surveyed participate in some type of supplier council, allowing them to collaborate with other suppliers and exchange ideas and best practices, as well as work together to increase efficiency across various channels and components.

They let customers call some of the shots. Middle-market companies often fear being “squeezed in the middle” between larger customers and suppliers, but in many cases ceding some control leads to greater overall success. For example, a customer may introduce data security procedures and accompanying software/systems to manage the flow, storage and protection of sensitive supply chain information. The research demonstrates that only companies serving a greater number of small customers maintain closer internal controls, while the “perfect link” is a more willing adopter of customer systems and processes.

Larger firms view themselves as more valuable to customers. The largest middle- market suppliers leverage the advantages of scale, resources and expertise to their advantage. Because of size, larger firms, with revenues between $100 million and $1 billion see themselves as more proficient suppliers and generally report themselves as being more satisfied with their overall supply chain performance than smaller com-

panies. They view themselves as more valuable to their customers and less vulnerable to supply chain risk due to their ability to absorb market shocks, such as natural disasters, port shutdowns and other disruptions.

The Lender Link Middle-market companies represent a sizable opportunity for secured lenders. According to NCMM’s Middle Market Indicator data, middle-market leadership reported during 2017 Q2 that revenue growth over the previous year had averaged 6.7 percent and, with few clouds on the horizon, the outlook remains positive. Employment growth for the same period averaged 5.7 percent, further reflecting strong economic expectations.

However, the growth successes achieved by the middle market and the crucial role that these companies play in the supply chain have been – relatively speaking – neglected. Lenders should not make the same mistake.

The middle market presents asset-based lenders with distinct opportunities to create new value by helping mid-market firms innovate, expand, grow and serve as pivotal suppliers – helping them understand and mitigate risk, and providing financing that enables them to minimize working capital and fund expansion and growth.

As a result, the middle-market lending space will continue to present excellent long-term prospects for strong lenders who understand the opportunities and challenges characteristic of this sector, and who have the capabilities and expertise to benefit from them. TSL Thomas A. Stewart is the executive director of the National Center for the Middle Market, the leading source for knowledge, leadership and research on midsized companies, based at the Fisher College of Business at The Ohio State University. Stewart is an influential thought leader on global management issues and ideas: an internationally recognized editor and publisher, authority on intellectual capital and knowledge management, and a best-selling author.

Stewart is a summa cum laude graduate of Harvard College and holds an honorary Doctor of Science degree from Cass Business School, City University London.

THE SECURED LENDER OCTOBER 2017 17

BY ERIC BADER Technology continues to transform the retail industry and reshape the way many businesses in that sector are funded and financed. Subscription-based companies, in particular, have forced lenders to rethink not only their offerings, but their overall approach. Eric Bader of Rosenthal & Rosenthal discusses the rise of the “Subscription Economy” and why lenders should pay attention.

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Open the business section of any major newspaper these days and the headlines are sure to send you running for the hills: Retail Bloodbath: Bankruptcy Filings Pile Up (CNN) Retail Apocalypse: Is Recession Next?

(Forbes) Big Bold and Broken: Is the U.S. Shopping Mall in a Fatal Decline?

(The Guardian) 22 Retailers at Serious Risk of Bankruptcy (Time)

It is nearly impossible to escape the onslaught of dismal tales of traditional brickand-mortar stores waging war against the rising tide of e-commerce giants like Amazon. To remain competitive, retailers have been forced to cut costs through layoffs, inventory reductions and store closings, all in an effort to simply stay afloat. As of July, 23 different retailers or consumer-oriented companies had filed for bankruptcy in 2017, with the industry on pace for a record number of bankruptcies before year end.

U.S. retailers are on track for more than 8,000 store closings this year, even more than in 2008 at the peak of the financial crisis. Phrases like “apocalypse” and “death spiral” abound, as retailers, and the financial institutions that back them, scramble to pick up the pieces and prepare for the impending storm.

The root of many of these troubles has been the rise of e-commerce and the everexpanding role that technology plays in nearly every aspect of the manufacturing, production and sales process across the retail space. Endogenous growth theory is an economic theory that states that there are no diminishing returns to knowledge or technology. This is something we see time and again, from the many inventions of the Industrial Revolution to the computer and digital revolution of the 1970s. In fact, the knowledge gained from the Industrial Revolution paved the way for the modern digital revolution we are experiencing today.

The digital revolution – in its many forms – is now so pervasive in our daily lives that we often overlook its impact. We have ATM machines on every corner, but bank branch closings by the dozens. We can listen to music on-demand on Spotify, and only tune in to terrestrial radio when we’re in rental cars. We juggle passwords for Hulu and Netflix, while the cable TV companies scramble for our business.

And our doorstops are filled with Amazon Prime boxes while we watch shopping malls close one after another.

In retail, technology has contributed to everything from accelerating the sales cycle to improving customer service to enhancing the overall shopping experience, forever altering the way brands

do business with their customers. But it hasn’t been all positive, with brands like J. Crew now struggling to stay in business after admittedly missing the boat on the e-commerce craze or Blackberry losing its market dominance when Apple did the unthinkable by putting the entirety of the Internet right in your pocket.

Another example of how technology is reshaping the retail market can be seen in what many have labeled the “Subscription Economy.” A pay-as-you-go subscriptionbased model that requires the end user to fork up a small monthly fee in return for a range of “on-demand” products and services. Consumers can now order weekly and monthly shipments of everything from designer clothing (Trunk Club) and gourmet meals (Blue Apron) to dog toys (Bark Box) and razor blades (Dollar Shave Club).

You name it, you can get it delivered right to your front door. A world that was once reserved only for QVC addicts shopping by phone for perfumes and telescoping ladders is now available – and accessible – to anyone with a smartphone.

In many cases, the model is successful because it is a win-win for the consumer and the company. For the consumer, in exchange for a monthly commitment and fee, they get a hassle-free experience, the predictability of a fixed price and the speed and convenience of an online transaction that anticipates what they need before they even know they need it. For the company, consistent recurring revenue is predictable, which lenders tend to love. The flow of inventory is also more predictable – and swifter – and the sales cycle is typically much shorter than traditional retail.

The subscription-based model is not a terribly new concept. In fact, it is quite familiar if you think back to the days of CDs with subscription-based music services like BMG and Columbia House, or even the early days of Netflix, when customers received DVDs in that recognizable red sleeve. The Netflix business is still around today because, even as streaming video entered the picture, the company was able to scale and evolve their business model to meet shifting consumer demands. If only Blockbuster was able to have that kind of foresight.

THE SECURED LENDER OCTOBER 2017 19

Whether they grew up in this subscription economy or were born into it, the businesses that are succeeding today are the ones that have recognized the need to move quickly, think creatively and adapt to the constantly changing needs and demands of the end customer. To avoid being the next Blockbuster, they must deliver products more efficiently, serve up tailored products and services that anticipate a customer’s needs and develop seamless user experiences.

To remain competitive, these businesses also require a different kind of funding model. They need faster approvals and more flexible financial products to run their businesses effectively and profitably.

Likewise, lenders must be equally flexible and innovative in their approaches, not only to remain competitive, but to stay relevant to the industries they serve. It is important to remember that, for better or worse, retail is changing. Lenders need to recognize and prepare for this ubiquitous shift or new lenders will come along to fill the void.

Know Your Borrower The subscription-based sector has become so saturated that businesses are tripping over each other to get a leg up on faster delivery speeds, more convenient transactions and, in some cases, even more outlandish offerings (think Battlbox for monthly survival gear or Dive Bar Shirt Club for, you guessed it, monthly dive bar t-shirts). Online retail giants like Amazon have adjusted their offerings accordingly and the 2,000+ subscription-based companies and their set-it-and-forget-it models have discovered that the key to success and profitability is the ability to adapt quickly.

To be serious players in this sector, lenders need to do the same. They must understand not only how this new economy operates, but how it is impacting the overall industry and the way consumers buy products and services. They also need to understand the individual companies that operate within it and the challenges and opportunities each faces. Lenders need to appreciate the quickened pace of the sales cycle, the end customer’s demands

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and desires, the competitive landscape and the value of the technology platforms that make all of these businesses possible.

Lenders, like these businesses, need to constantly evolve their models and recognize what makes their customers tick.

Subscription-based businesses have been around for my entire lifetime and will continue to exist for the foreseeable future.

The current crop of lenders must learn to not only lend in this space, but also pivot so they are ready when the next big thing comes along.

cut it with this crowd. To have a shot in this subscription economy, lenders must offer flexibility and be prepared to address the specific needs of each individual borrower.

Different business needs require different types of loans, so lenders must be able and willing to find the right fit.

Be bold. Be willing to try something unconventional. Take on a new kind of risk or try your hand lending to a business in a new industry. Thinking creatively can open the door to a whole new world of possibilities – and profits. TSL

Be Nimble When lending to a subscription-based business, lenders need to pay attention to different indicators than they would a traditional brick-and-mortar business – or even a less predictable e-commerce company. For sure, the sales cycle and inventory must always be top of mind, but being aware of what drives customer acquisition and retention is perhaps even more critical. Understanding the “churn and burn” rate of these businesses is vital to measuring the success of a company in this segment. Having a strong grasp of the conversion and renewal rates, as well as the cancellation rates (and the cancellation policies!) are key.

With these factors in mind, lenders must reframe the way they measure risk and return for these types of businesses, not to mention their exit. It is a different way of looking at funding a business, with reliable indicators of success (and potential losses) and also potentially faster repayment for the lender.

In short, lenders must learn to get out of their own way. They need to be more nimble and find ways to get cash into the hands of business owners and entrepreneurs more quickly.

Eric Bader brings diverse experience and expertise to Rosenthal & Rosenthal, a commercial finance company specializing in factoring, asset-based lending and purchase order financing. As senior vice president, Bader focuses on corporate development, including strategic marketing, technology and financial initiatives for the firm.

Be Resourceful Given all of the elements that make subscription-based businesses unique – and potentially good investments from a funding perspective – lenders must be willing to stretch their typical formulas and modify protocols to appeal to and attract the most lucrative clients. Traditional, often outmoded, funding models simply will not

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Bader joined Rosenthal in 2010 as a credit analyst and was quickly promoted to Vice President and underwriter in the firm’s assetbased lending group, where he was responsible for financial analysis, risk management, due diligence and business development. Prior to joining Rosenthal, Bader began his career as a classically trained artist. Since leaving the art world, he earned an MBA in finance and investments at Baruch’s Zicklin School of Business as well as the CFA designation. He is a graduate of the George Washington University.

Bader is an active member of the CFA Institute, the New York Society of Security Analysts and the Milken Institute Young Leaders Circle, and proudly supports St. Jude Children’s Research Hospital.

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Ellen Alemany, Chairwoman Tom Ricketts, Chairman and Owner of the Chicago Cubs and CEO of CIT Group After snapping their 108-year championship Presented By The Women in Commercial drought with a World Series win last fall, the Finance Committee Cubs earned another title this past spring when chairman and owner Tom Ricketts was In 2013 Ellen Alemany retired as head of the named Sports Executive of the Year at the Royal Bank of Scotland Americas and Citizens Sports Business Awards, and, really, who Financial Group, receiving a Lifetime Achieveelse was it going to be? Since his family ment Award from American Banker the same bought the Cubs in 2009, Ricketts presided year. Her retirement would be short-lived: over a makeover of the organization that Three years later CIT Group asked her to culminated in a World Series championship revamp the commercial lender, which serves in November. Hard to top exorcising 108 middle market clients and small businesses years of futility. nationwide. Alemany quickly launched a three-year transformation plan that included In addition to his Cubs duties, Tom is also simplifying and strengthening the company chief executive officer of Incapital LLC, a and growing its core businesses.

Chicago investment bank that packages corporate bonds for retail investors. He is Her four decades in financial services, largely also a director of TD Ameritrade Holding focused in commercial banking, make her Corporation as well as the son of Ameritrade well-suited for the task to revamp one of founder J. Joseph Ricketts.

America’s 100+ year-old companies by focusing on delivering for clients, customers BE PART OF SOMETHING and shareholders. Investors seem to approve, driving shares up 50% since June 2016.

epic

BLOCKCHAIN: ARE WE THERE YET?

BY PHIL GOMES AND TONY SMITH Despite (or maybe because of) its roots in hacker and crypto-anarchist circles, blockchain technology has captured the imagination of businesses worldwide. Since it enables companies to work from a single, distributed ledger, this innovation holds great promise for maximizing efficiencies and increasing trust.

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Blockchain technology sits at the core of a quiet, yet significant, revolution in the finance industry. This article summarizes the current state of affairs by focusing on some recent examples of how blockchain technology has begun to impact secured lending. In summary, the revolution has just begun. Right now, the development and adoption of blockchain technology is comparable to the Internet during its AOL/Compuserve/Netscape/dial-up stage. Like the rapid and massive evolution of the Internet, we believe blockchains will change secured lending in profound ways.

The Basics Given its mysterious origins, it could be said that Bitcoin was a victim of rather unfair press. However, relatively quickly, the system underlying it--called a “blockchain”--quickly started to capture the imagination of the financial services industry.

Blockchain technology was originally invented to solve the problem of creating a stable currency system that didn’t rely on a banks or other central parties to keep the ledger of who had how much and who gave what to whom. The ledger, instead, is distributed throughout the Bitcoin network’s participants and is maintained by consensus. Some of them, called “miners,” volunteer to secure the network by packaging transactions and solving a cryptographic make-work puzzle every ten minutes. These miners do so (at considerable expense in electricity and hardware) in order for a chance to compete for new bitcoin. Here, you don’t have to have trust in the counterparties to a transaction; you just need to trust the code that governs the system. That code is open for all parties to inspect.

The financial services industry, however, saw great benefit in the blockchain approach, ironic given that the technology was more or less invented to disintermediate them. As it turns out, having all parties to a transaction working from a single consensusdriven ledger that no one party owns

or controls has a lot of appeal. For one thing, settlement times are promised to collapse from days down to minutes or even seconds. For another, all parties have the same view of the data. Still further, no single party controls the data and that data’s integrity can withstand parties joining and leaving at will. This makes it possible to radically rethink how consortia and industries cooperate and behave.

These financial industry participants then realized that by making “private” or “permissioned” blockchains, they gain some of the advantages of blockchain technology (a single, immutable, consensus-based ledger) without many of the perceived drawbacks (expensive “mining,” foundational resistance to KYC/AML norms, etc.). By taking this permissioned approach, all parties in the network are known to each other.

Why do this? Because even in this modern age the settlement process involves a vast and labyrinthine network of institutions that, at some point, must often take days to reconcile their accounts. When everyone is working off of the same ledger, businesses can achieve greater levels of efficiency and transparency.

And the marketplace has certainly shown interest. According to Juniper Research, about six out of every ten large firms either plan to deploy blockchain technology or are at least seriously considering it.

Applications Secured lenders face several significant challenges: ◗ They need to document their security interest in collateral. ◗ All changes to the collateral, such as the shipment of product or the payment of an invoice, or other events, need to be recorded as soon as possible. ◗ Lenders need to become more efficient. ◗ Finally, fraud must be avoided or, at a minimum, detected quickly.

Blockchain technology goes some way

toward addressing all of these requirements. While it would appear that no one is widely deploying blockchain technology beyond very promising pilots, there are stories adjacent to the secured lending space that give us some sense for how the technology can affect the industry.

Trade Finance Trade finance is a complicated endeavor and, as it turns out, moving the money around represents the very least of the headaches experienced by the participants. The process involves weeks and months of negotiating the terms of the letter of credit that secures the transaction and reduces risk for importers and exporters. This process involves postal mail, overnight delivery, human couriers, and a host of other ways that document fraud could be introduced.

In the fall of 2016, Barclays (by way of one of its “Accelerator” development program startup Wave) laid claim to the very first trade finance transaction executed over a blockchain. The deal involved an arrangement between Ornua (neé the Irish Dairy Board) and the Seychelles Trading Company regarding the export guarantees on six figures worth of dairy products. In this pilot, all of the documents related to the transaction were secured via the blockchain--when you can create an immutable decentralized data store or means of notary, securing the terms of trade documentation becomes much easier.

The advantages of blockchain technology need not stop there, however.

A transaction by Brighann Cotton moved product from Texas to China and involved the respective banks of each party as well as technology from the startup SKUchain. In this application, “smart contracts” (essentially business logic that resides on a blockchain, as opposed to merely data) took the place of the letter of credit. Further, the product’s location triggered terms of the contract and transferred payments accordingly as it wended its way from port to port.

More recently, enterprise compaTHE SECURED LENDER OCTOBER 2017 23

nies like IBM and Microsoft as well as startups like Bloq, have unveiled their own solutions for helping companies leverage blockchain technology for trade finance applications. The R3 consortium has also explored this area. Since 80% of global trade is unsecured by letters of credit (“open account transactions”) several European banks are exploring a “Digital Trade Chain” to address the issue.

Asset-Based Lending/Factoring Potential uses of blockchain technology in the factoring and ABL space can be as basic as recording invoices (or summaries of same) onto a blockchain and permanently documenting subsequent actions related to those invoices. Most importantly, by using blockchain technology, one can capture the payment of an invoice or any credits related to that invoice, such as discounts applied or credits related to returned or damaged goods. Having the payer link their payment of invoices on the blockchain to the original invoice record will increase efficiency by eliminating the factor’s need to match payments to invoices.

Startups like Stampery leverage the public blockchain to certify the “existence, integrity, and attribution of communications,” according to its website. In the factoring and ABL space, this function could apply to notification letters and default notices among other important communications. Stampery even has an add-on for Microsoft Outlook. With this add-on, a sender permanently records the time and date of a document and, later, can prove that it has not been altered from that time— arguably much better than a notary.

So far, these applications are fairly incremental—essentially making business records more permanent. However, if all parties are using the same ledger, the transaction and the receipt become one and the same. (Some call this “triple entry accounting,” with the debit and credit recorded on a single set of books, sealed permanently on a blockchain.) This is how one gains the efficiencies of the kind that has excited

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Wall Street. Most certainly, fraud becomes far more difficult and auditing a much simpler matter.

The Hong Kong Monetary Authority, along with the accounting firm Deloitte and the region’s five largest banks, have announced a blockchain platform that includes both trade finance and factoring. Additionally, blockchains could be used to document other forms of collateral, such as inventory, equipment or real estate. Everledger, a global startup, uses a blockchain and smart contracts to track valuable assets. While originally designed to track diamonds, the concept could be applied to inventory and equipment. Using this strategy, a lender’s collateral interest in an asset would be documented along with any changes in the asset’s status such as its sale or simple movement from one place to another.

In summary, blockchain technology will increase the security, efficiency, and reduce risk around ABL and factoring transactions. However, there are still hurdles to navigate and the industry-defining, signature deployment is yet to come.

Early Steps Ask the Most Important Question. The most important question is a speculative one: “What do I think that my company and all of the parties who matter to our business could do if we had access to a single, common, secure ledger?” If the answer involves a problem that is worth solving, then you might consider blockchain technology.

And Then Ask the Second Most Important Question. Having answered affirmatively to the above, then the next question is: “Can this problem be solved by more conventional (read: less-expensive) means?” Demand for blockchain talent and solutions is extremely high as of this writing. Fortunately, most companies in this space would be quick to point out if blockchain technology is not the best way to solve your problem.

Before You Build, Try to Join. If there is one thing that the advent of blockchain technology has inspired, it is the

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rapid emergence of various consortia looking to explore how blockchain technology affects their industry.

Chances are good that there are similar consortia forming within your company’s industry or, in the case of major metropolitan areas, with a specific geographic focus.

Don’t Be Afraid to Start Small. Obviously, when you are talking about a secure permanent ledger that is maintained either by association partners (a consortium like R3) or even complete strangers (the Bitcoin or Ethereum networks), your cost-of-error is likely to be fairly high. A small deployment isn’t likely to immediately excite the denizens of your executive suite, but an expensive, failed experiment is sure to excite them for a completely different set of reasons. By starting with small pilot programs with an eye toward scale, you can build confidence in blockchain approaches over time. TSL The authors would like to thank Tony Brown, founder and CEO of The Trade Advisory.

Phil Gomes is a senior vice president of U.S. B2B Digital at Edelman. He has more than 20 years of experience in promoting and integrating new and emerging technologies, working in Silicon Valley, Los Angeles, and Chicago, where he currently resides.

He is a founding fellow and advisory board member for The Conference Board’s Society for New Communications Research and the director of communications for the Chicago Blockchain Center, a public/private partnership. Gomes has been exploring blockchain technology since 2014, open source software since 1994, and keeps a clandestine Linux machine under his desk at work.

Tony Smith was most recently commercial director – Americas with HPD Software.

He has over 40 years of experience in accounting, system development, and software sales. Smith has worked with asset-based lending and factoring providers for the last 27 years.

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Taking the Pulse of Retail Lending

By Joseph Nemia

26

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Joseph Nemia, Head of Asset-Based Lending, TD Bank, provides an overview of the ever-changing retail sector.

In the heyday of the American shopping mall, anchor stores thrived, foot traffic was a certainty, and seasonal promotions touted quality brands at bargain prices.

If reading that sentence makes you feel nostalgic, you’re not alone. The transformation of the retail sector is in full throttle, causing its share of disruption. Brick-andmortar stores must reinvent themselves as nimble, omni-channel competitors with more to offer than service, selection and dedicated salespeople. Overall, the marketplace for retailers has exploded—in good ways and bad— creating wide openings for innovators and forward thinkers, and dangerous craters for those anchored to old paradigms and tactics.

Technology has affected every part of the retail cycle and created monumental shifts in consumer behavior and expectations. Simultaneously, it has enabled real-time data and analyses, providing accurate, actionable information on a granular level, offering insights as never before. Competing in the omni-channel retail universe has brought both difficulties and opportunities for classic retailers, but make no mistake, the sector is alive and well. After all, according to the U.S. Census Bureau, ninety percent of all retail sales take place in brick-and-mortar stores. Still, as retailers experience seismic shifts in their business models and strategies, asset-based lenders (ABL) must consider many factors to best serve the sector and to avoid unnecessary risk.

It’s no surprise that many beloved brick-and-mortar icons are shutting stores, laying off workers, losing market share and, in more dramatic cases, filing for bankruptcy. Online competitors with low overhead and a wide multi-channel presence are swallowing market share.

For those highly leveraged companies that cannot restructure debt, liquidating assets and exiting the industry has become the only option. Even venerable retail and apparel brands such as Sears, The Limited, Gymboree and Payless Shoes have “right-sized” or left the physical marketplace completely, according to CNN.

The unmistakable truth is that leaner, more technologically advanced, wellgoverned organizations must regroup and re-create robust, interconnected channels of merchandising, marketing and sales to regain market share and profitability. However, technology is not the only disruptor. Other factors have also contributed to the stressors of the retail industry. Economic stagnation, low wages, unemployment, weather patterns, rising operating costs in highprofile areas, fuel prices, inventory management costs, border taxes, and even the political climate of the nation and specific regions influence the sector’s gyrations. And it’s important to note that, while Moody’s Investors Service recently reported that the ranks of distressed retailers will continue to grow over the next 12 to 18 months, the firm’s lead retail analyst noted that “the majority of retailers are fundamentally healthy.”

Moody’s reports that, while department stores and discounters are facing struggles, dollar stores, convenience stores, auto parts retailers, off-price stores and supermarkets are seeing growth.

So, even as monumental changes in the sector cripple some retailers, there is growth. In fact, Forrester research analysts reported in August that the retail sector has grown 3.8 percent in 2017 thus far, and sales of $3.56 trillion are expected for the year, a gain of 1.4% over 2016. Digital and e-commerce are fueling the retail expansion, even as brick and mortar sales struggle, and the financial burdens of excessive square footage are manifesting. Online consumer buying behavior, spurred by job gains and income gains, are allowing American consumers to shop for things they may have held back from buying last year. In this climate, those retailers who maximize and reinforce connections and play to their strengths through multiple channels are poised to gain market share. Those who harness technology to enhance intuitive, convenient user experiences fueled by data will lead the way.

Consider Target, for example. In a February interview with CNBC, Target

THE SECURED LENDER OCTOBER 2017 27

CEO Brian Cornell, said the store plans to continue its expansion in New York City and other densely populated markets, and has doubled its digital footprint in recognition of the market realities of consumer behavior. The company has invested $7 billion in its digital channels and is moving toward repositioning for the future. According to Cornell, development of small-format stores is being accelerated and the company is remodeling, reworking its supply chain for speed and seeking to reinvigorate store sales by creating a fresh experience that keeps shoppers coming back.

In addition to remodeling the shopping experience, new store brands are being launched. Lastly, Target’s Cartwheel app, which allows coupon-less discounting, will be rolled into its robust Target app to provide a simplified shopping experience for in-store consumers, including current promotions and a map identifying the location of products on sale.

For retailers like Target, as well as others, investing for the future and building a multi-channel strategy for today’s retail marketplace will be key to expanding share. Using data to understand what motivates consumers to come back will also be vital. For example, in the beauty space, free from the size, style and cost limitations of apparel, Ulta’s consumer experience is central to its stores’ success. Ulta’s chief marketing officer said that they looked closely at the core motivations of customer engagement, and tailored the in-store experience to be more engaging while using ecommerce to complement their brick and mortar outlets. Ulta also established a strong loyalty program, which has amassed over 23 million active members.

Apple, whose stores lead all other retailers worldwide in all categories in sales per square foot according to researchers at CoStar, also built its brick-and-mortar locations in 2001 with customers as the focus. Apple’s stores are not only efficiently designed showrooms, they offer a value-added experience for consumers: service and classes on everything from creating spread-

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sheets to producing music, video and artwork. During its first-quarter earnings call in 2017, the company reported that it continues to update its stores and expand store programs to educate and entertain, as well as help entrepreneurs grow their businesses by using Apple products.

These examples illustrate that no matter which retail sector is examined, ideas and innovation are keys to moving forward in times like these. Therefore, to mitigate risk, ABLs must assess retailers’ strategic plans, as well as governance and culture. Look for companies that have strong leadership. Look for those that have taken into consideration the full consumer experience and that are layering digital, mobile and in-store experiences together in a cohesive way.

Consider the following questions: • Are they using technology to generate insights that drive sales?

• Are they proactively identifying and appealing to customers’ preferences?

Such intelligence helps brick-and-mortar retailers more effectively compete with online companies. For example, by suggesting adjacent products via apps in the store, retailers can provide consumers solutions and selection, not just what is asked for.

Additionally, along with retail appraisers’ valuations of underlying assets, lenders should consider analyzing timely reports of performance and profitability by store and region to get a fuller, more balanced picture. As part of that, take into account store geography and economic factors, and any news that may move the needle for the sector, such as merger and acquisitions, bankruptcies, consolidations and layoffs.

While some have called this year a “retail apocalypse,” the truth is less bombastic. Change often feels apocalyptic, but isn’t. In fact, change is often transformative and profitable and highly remarkable, as a review of retailing history would support. Retailers today are retooling and re-establishing what they are or what they need to be. They are addressing the parts of their businesses that are sluggish or stale and are

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moving forward with fresh ideas. Those who succeed will pick a lane to travel in, and will identify their strengths and appeal to consumers’ needs based on those strengths. They will adopt new strategies and will adapt their unique brands to meet consumer preferences that have been identified and measured.

Those who will flounder will likely be too highly leveraged, sunk by debt that cannot be restructured, or will be unable to break free from deeply ingrained beliefs regarding inventory, merchandising, store design, customer relationships and the omni-digital reality. They will fail to become leaner and more efficient and will succumb to more nimble and agile competitors. As asset-based lenders, of course, the key to building market share is predicting which is which. TSL Joe Nemia is head of asset-based lending for TD Bank. He has over 30 years of experience in corporate finance. Prior to TD, Nemia was at RBS Citizens Financial Group where he served as president of RBS Commercial Finance.

Prior to RBS, he was at CIT where he served as president, commercial and industrial. He was also a senior managing director at GE Commercial Finance where he held a number of leadership positions during his 14 years with the company. He was a founding member of GE Commercial Finance and was instrumental in the middle-market build out of the ABL business. He completed GE Company’s Global Business Management training in Tokyo, and received Black Belt certification in Six Sigma.

Nemia is a Trustee of National Jewish Medical and Research Center; he serves on the Board of Directors for Junior Achievement in Stamford/Greenwich, CT, and is a member of Loyola School’s Finance and Audit Committees.

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Refinancing the Borrower Through an Assignment and Assumption

BY JASON I. MILLER In Part 2 of this two-part series (for Part 1, please see the May issue of The Secured Lender), Jason I. Miller continues to focus on key provisions typically found in an assignment and assumption agreement, i.e., conditions precedent and limited representations and warranties, and contrasts an assignment and assumption against a traditional payoff.

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When, Why, and How (Part 2)

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As mentioned in Part 1, an assignment and assumption structure can be a strategic arrangement for a secured lender seeking to efficiently and speedily close a refinancing of a loan. Part 2 focuses on technical aspects and specific provisions related to and found in an assignment and assumption agreement (the “Agreement”).

Conditions Precedent The obligations of each of the parties under the Agreement should be subject to the satisfaction of certain conditions precedent.

Assignors and existing agent should condition signing the Agreement on the following: ◗ Receipt of the fully executed Agreement. ◗ No court orders issued that would prevent the parties from entering into the transaction contemplated by the Agreement. ◗ The existing Agent receives the aggregate purchase price. To the extent that certain existing third-party obligations need to continue to be supported by letters, the outstanding letters of credit issued by the LC issuers will need to be cash collateralized in the manner required under the credit agreement or replaced by new “back-to-back” letters of credit issued by a new issuer. The amount of any such cash collateral should be included in the aggregate purchase price. ◗ The existing Agent specifies wire instructions for payment.

Assignee and New Agent should condition signing the Agreement on the following: ◗ Receipt of a copy of the Agreement. ◗ Receipt of executed notices to, and consents from, third parties, such as participants, landlords, warehouseman, bailees, counterparties to intercreditor and subordination agreements, and depository banks. ◗ Receipt of original promissory notes executed by the Borrowers, if any, and receipt of possessory collateral such as original stock certificates and original promissory notes evidencing indebtedness owing to the Borrowers.

◗ No court orders issued preventing the parties from entering into the transaction contemplated by the Agreement. ◗ Evidence that all subordinated thirdparty debt has a maturity date at least 90 days past that of Assignees’ debt or an amendment executed on or before the closing amending the third-party debt’s maturity date. ◗ The New Agent and Assignees will want to review any third-party loan agreement to confirm it permits the amount of the Assignees’ maximum loan amount (whether or not increased on the closing date). An amendment to the third-party loan agreement may be necessary to increase the amount of permitted debt. Similarly, if the Assignees are providing financing under the new credit facility in excess of the maximum amount provided by the Assignors and such new maximum amount is in excess of any maximum debt cap under any applicable intercreditor agreement, receipt of a form of amendment to the intercreditor approved by the other lender party to the intercreditor agreement (to the extent such a lender has the right to consent to such increase). ◗ If any of the Assignors is a finance company financed by an institutional lender, receipt of a satisfactory consent to the assignment executed by such Assignor’s lender, if applicable.

Similarities Between the Agreement and a Payoff Letter A typical payoff letter includes a detailed calculation of the amount that is necessary to pay off the existing lenders and cash collateralize any outstanding letters of credit, if applicable. This calculation is usually expressed in a line-by-line list of items that make up the outstanding amount of obligations under the credit agreement (e.g., outstanding principal, accrued and unpaid interest, unpaid fees and expenses, the aggregate amount of any issued and undrawn letters of credit, and any reserves and holdbacks). Within the context of the Agreement, the payoff concept is substituted for a purchase price concept. That is, the aggregate purchase price is the amount necessary to be paid to the Assignor for all

outstanding obligations under the credit agreement, as if the transaction was a traditional payoff. In essence, the Agreement and the aggregate purchase price serve the same purpose. To streamline the process and avoid the need for a “payoff letter” document, the calculation of the aggregate purchase price can be set forth in a schedule to the Agreement.

Authorization to File UCC Financing Statements and Further Assurances For the Agreement to be effective, the existing Agent must authorize the New Agent to file, on behalf of Existing Agent and Assignors, UCC financing statement amendments. These amendments will reflect the assignment by the Existing Agent to the New Agent or Assignees of all UCC financing statements. Specifically, they should name the New Agent as the assignee secured party of record and any applicable Borrower or Guarantor as debtor. As a “belt and suspenders” conservative approach, the New Agent may want to file a new initial UCC financing statement as well. In addition, the New Agent should be authorized to file assignments of mortgage/deed of trust and intellectual property assignments.

The Agreement should also contain an assurance that the Existing Agent agrees to execute and deliver to the New Agent, at the Borrowers’ cost and expense, any other agreements, releases, terminations, assignments, documents, or instruments reasonably requested by the New Agent or Assignees to reflect the assignment of the liens of Existing Agent in the collateral to New Agent or Assignees, as applicable.

These authorizations are virtually identical to those you would ordinarily find in a payoff letter.

Agreement to Remit Proceeds of Collateral It always takes time for account debtors who have been notified of new payment instructions to start making payments in accordance with those instructions.

As such, as in a payoff, it is necessary to include a provision pursuant to which the Existing Agent and Assignors agree that any checks, remittances, and other items or proceeds of accounts receivable and THE SECURED LENDER OCTOBER 2017 31

other collateral received by any of them are held in trust for the benefit of the Assignees, and then properly remitted to the Assignees.

Full Releases from Borrowers and Guarantors Just as in a payoff, the Existing Agent and Assignors will want to receive a broad release and indemnity from each of the Borrowers and Guarantors, together with a waiver of claims and a covenant not to sue. The Borrowers and the Guarantors will likely request that the release and waiver provisions be mutual. A carve out may be necessary if letter of credit obligations are being cash collateralized.

Limited Representations and Warranties by the Parties As mentioned, the Assignors and Existing Agent make the assignment without representation or warranty except as expressly set forth in the Agreement. They will want to limit the representations and warranties they make and what they cover.

The Assignors and Existing Agent should make the following representations: ◗ Each Assignor is the legal and beneficial owner of the interests being assigned. ◗ Assigned interests are free and clear of any lien, encumbrance, or adverse claim. ◗ Both the Assignors and Existing Agent have the full power and authority to execute the Agreement and to consummate the transactions contemplated. ◗ All documents executed by them will be valid, binding and enforceable against them. ◗ Their performance of their obligations under the documents will not conflict with, result in a breach of or default under, or be adversely affected by any agreements, instruments, decrees, judgments, injunctons, orders, laws, rules, regulations, etc.

At the same time, the Assignors and Existing Agent will make it clear that they assume no responsibility for the following: ◗ Any statements, representations, or warranties made in or in connection with the loan documents.

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◗ The execution, legality, validity, enforceability, genuineness, sufficiency, or value of the loan documents or any collateral therein. ◗ The financial condition of the Borrowers, any of their subsidiaries or affiliates, or any other person obligated in respect of any loan document. ◗ The performance or observance by the Borrowers, any of their subsidiaries or affiliates, or any other person of any of their respective obligations under any loan documents.

The Assignees and the New Agent should make the following representations: ◗ Both parties have the full power and authority to execute the Agreement and to consummate the transactions contemplated. ◗ All documents executed by them will be valid, binding and enforceable against them. ◗ The performance of their obligations under the documents will not conflict with, result in a breach of or default under, or be adversely affected by any agreements, instruments, decrees, judgments, injunctons, orders, laws, rules, regulations, etc. ◗ Each Assignee meets all of the requirements to be an assignee under the terms of the credit agreement. ◗ The parties have received a copy of the credit agreement, and have been accorded the opportunity to receive copies of the most recent financial statements delivered per the terms of the credit Agreement, and any other document and information necessary to make a credit analysis and decision to enter into the Agreement. ◗ Independently and without reliance upon Existing Agent or Assignors and based on such documents and information they have deemed appropriate, they have made their own credit analysis and decision to enter into the Agreement and to purchase the assigned interests.

The Borrowers and Guarantors should make the following representations: ◗ As of a date certain, the outstanding

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◗

◗

◗

◗

◗

principal amount owing under the loan documents, together with all accrued interest thereon and unpaid fees and expenses.

None of the obligations under the credit agreement is subject to any defense, deduction, offset, or counterclaim by the Borrowers.

The loan documents are legal, valid, and binding obligations enforceable against the Borrowers and Guarantors.

The liens granted by the Borrowers and Guarantors under the loan documents are valid, duly-perfected, first-priority liens, subject only to permitted liens.

The Borrowers and Guarantors ratify, confirm, and reaffirm the security interests and liens granted pursuant to the loan documents.

The Borrowers and Guarantors have had the benefit of the advice of legal counsel.

With today’s competitive landscape, an assignment and assumption agreement can be a successful alternative deal-documentation strategy for secured lenders who want to close a refinancing as quickly and efficiently as possible. There are many factors to consider before a secured lender can determine if an assignment and assumption of the existing lenders’ loan and loan documents is the right approach.

Thorough diligence, advice of counsel and an analysis of these factors will help lenders in seizing these opportunities where they exist. TSL Jason I. Miller is a partner at Otterbourg P.C. He concentrates his practice in the area of commercial finance, with a particular focus on asset-based and cash-flow financing. He represents major national and international commercial banks, finance subsidiaries of banks, mezzanine lenders, independent factors and finance companies. He can be reached at jmiller@otterbourg.com.

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ANDREA PETRO

REFLECTS ON HER

TENURE AS CFA PRESIDENT

CFA’s 2017 president, Andrea Petro, is an executive vice president and division manager of the Lender Finance division of Wells Fargo Capital Finance, based in Dallas, TX. She holds the distinction of being CFA’s second woman president. With over 20 years of experience in asset-based lending, Andrea established the Lender Finance division in 2000, with the exclusive mission of providing financing for specialty finance companies. Her success with the Lender Finance division led to the expansion of her role and the formation of the Resort Finance and Supply Chain Finance units.

BY MICHELE OCEJO

34

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Petro served as the chair of CFA’s inaugural 40 Under 40 Awards in 2016 and as a judge for the 2017 40 Under 40 Awards. Petro recently announced she would be retiring at the end of this year. Here, she updates readers on CFA’s recent accomplishments and reflects back on her career.

In the interview we published as you began your tenure in October 2016, you mentioned engaging the next generation as one of your passions. Can you update readers on what has been done in this area during the past year?

First of all, the inaugural 40 Under 40 event was held in September 2016. It was extremely successful with over 350 people in attendance. The Secured Lender devoted an issue to the event highlighting the winners. The most important aspect is that the entire event was focused on recognizing the talented young people in the industry. It was so successful that we are organizing a second event which will occur on September 28, 2017, at the Pierre Hotel in New York City. Those proceeds will benefit the CFA Education Foundation. And those proceeds will be used to continue to provide educational programs for, among others, young professionals in the industry. [Editor’s Note: This interview took place prior to the 40 Under 40 Event.]

We’ve accomplished both recognizing

talented young professionals and also providing them with additional benefits in the form of educational programs.

The second part of that question is that we have begun to strengthen our connection to our chapters. Our chapters tend to have a younger membership base than national because it’s local. For many chapter members, this is their first step in terms of networking within the industry and engaging with CFA. They are interested in meeting other ABL and factoring professionals within their region. We are taking a number of steps in terms of strengthening the relationship between national CFA and CFA’s chapters.

In June, I attended a chapter leaders meeting in Austin, and was very encouraged. We opened up the meeting to discuss how we can provide greater benefits to the chapters. We also recognized the success that the chapters are having with their young professional committees.

CFA National is learning from the local chapters and we want to provide them assistance in any way we can. This is another example of how CFA is reaching out to young professionals at a regional and local chapter level.

You played a vital role in the development of CFA’s Women in Commercial Finance Conference, which will be held in September. What do you think is the significance of this event and how do you think the industry can attract not only more women, but young professionals in general?

First, I’d like to give credit to Debbie Monosson who had the idea for a Women in Commercial Finance Committee. That was in 2012.

So once we formed the Committee, I pointed out to the other members of the Committee that women were basically absent from the CFA. If you looked at any type of convention or conferences, there were very few women speakers from the industry. The only female Convention keynote speaker that I recall was Condoleezza Rice. It was as if women didn’t exist in the industry. They were absent as panel moderators, they were absent as panel members, they were not

THE SECURED LENDER OCTOBER 2017 35

f you look at the Conference agenda, you will see that it focuses on teaching women how to be compensated properly for their work and their contribution to their organizations. And it’s not just monetary compensation. It’s also recognition and promotion within the industry. The agenda was designed to provide practical steps about how to achieve equality in compensation and stature.”

involved in the leadership, for the most part, of the chapters, and certainly not involved in the leadership of the national organization.

We systematically began to change that by asking women to volunteer to be on the convention committee, be a part of convention planning. This has resulted in a tremendous change in how professionals are selected to be speakers, panel moderators, et cetera. It’s now become just an embedded way of including members. We are looking for diversity, and not just gender diversity, but also all types of diversity in terms of what people do within the industry. CFA is no longer dominated by a certain gender, a certain function, ethnicity, or race, and we are really reaching out to be inclusive. I think we’ve changed our thinking tremendously in the space of four years because we have done it systematically.

The beginning planning for the Women in Commercial Finance Conference began at a meeting the day after the 40 Under 40 Awards celebration last September for young women professionals. It was an extremely successful meeting because, for the first time I believe, our discussions were authentic about the lack of diversity in our industry.

We were honest about it and we talked about it and developed ideas about how we would go about concretely trying to change that within the industry.

If you look at the Conference agenda, you will see that it focuses on teaching women how to be compensated properly for their work and their contribution to

36

their organizations. And it’s not just monetary compensation. It’s also recognition and promotion within the industry. The agenda was designed to provide practical steps about how to achieve equality in compensation and stature.

It seems to me there is a lot of complaining and a lot of analysis about why these problems exist for women, but there isn’t guidance on how to change it.

It’s important to recognize these problems, but it’s more important to actually solve these problems completely.

That’s why I’m excited about the conversation we’re going to have around compensation with highly ranked recruiters in the financial services industry, and we’re also talking about how women are selected to be on boards, and, whether it’s a nonprofit or a for-profit board, what to expect. If you desire to gain that experience, these are the steps to take to get there.

CFA instituted a new governance policy last year, which distributed authority and management to working committees rather than confining the responsibility to a seven-person Management Committee. One goal of this move was to reenergize volunteer leaders. Can you tell us how this new structure has affected the Association?

The governance change has basically provided the foundation for us to engage our very intelligent, very talented, very energetic members. Previously, there was little input from members in terms of what the value proposition of the

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CFA was. As a result, that value proposition had gotten very stale because the governance created a wide gulf between members and the management of the Association. We changed it to a 22-member Executive Committee, and we have been able now to engage our members in terms of both ideas and effectiveness.

Prior to the change, we had a very large Executive Committee, which was basically a rubber stamp. We would hold three meetings at the Convention: a Management Committee meeting, then an Executive Committee meeting, which repeated all of the information from the Management Committee meeting, and then we would have a Board of Directors meeting, which repeated all of the information from the first two meetings.

The meetings weren’t engaging because they were presentations without participation. That has all changed tremendously. Each committee has been empowered to assess what value those committees contribute, make changes and develop their own ideas around how to provide value to members.

Our YoPro (Young Professional) Committee is extremely popular amongst young industry professionals, both in terms of education and in networking.

The Women in Commercial Finance Committee is highly energized. Our Independent Finance & Factoring Committee is energized as well, and our Convention Program Committee has changed the conventions for the last two years, and I think the content has been much more interesting. I think the venues and the

speakers have improved and you’ll see again for the Chicago Convention that we’ve really stepped up the quality of the content and the engagement of members in planning the Convention.

What would you say to young professionals to encourage them to become volunteer leaders of the CFA? Becoming a leader in the CFA provides you with management experience. As a young professional, you probably haven’t gotten your first assignment managing people. If you volunteer for the CFA, you get that experience and it’s invaluable.

You will learn a lot by managing people and managing a committee process. I think it truly enhances your ability to succeed as a professional.

Secondly, you make a large number of very valuable connections within the industry, and that will help you for many years. When you are connected to individuals who are knowledgeable and able to refer business to you, who are able to give you background information on credits that may be trying to move from one organization to another, that’s invaluable. It’s so important to have that connectivity within the industry.

It’s going to increase your value as an individual contributor to your organization tremendously. And I think you’ll also develop some very valuable friendships with others in the industry.

Do you have any advice for our new CFA president, Michael Monk?

My advice is to reach out and engage every person on the Executive Commit-

tee - engage with them and listen to their ideas. I have been extremely impressed with the level of commitment, the level of thoughtfulness, the analysis and the ideas that come from the individual committees. That’s what is going to propel the organization forward: getting the grass roots ideas and the grass roots involvement. Top down won’t work anymore.

That means that you have to be continually engaged with your committee members and other members when they have ideas. You can’t wait for them to reach out to you. Every conversation I’ve had with a committee member or with a chapter leader has really helped me understand what we need to do to move the CFA forward. So I would say: be engaged.

I would like to thank Richard Gumbrecht, Michael Monk, David Grende, John DePledge, Jeff Goldrich, Jon Helfat and Richard Kohn for helping me throughout the year. Their unique and significant contributions have allowed us to achieve a successful year of change at the CFA. You are retiring from Wells Fargo at the end of this year after a very successful career. As you reflect back, are there any particular professional milestones that come to mind? And could you please offer some words of wisdom for those just starting their careers?

As I reflect back, I feel very fortunate to have had an exceptionally rewarding career. It did come with its challenges and obstacles, but I have been lucky to have had great mentors and I made sure

to always surround myself with strong diverse leaders.

My first ABL position was in 1985 with FirstCity Financial Corporation, the ABL subsidiary of First City National Bank, in Houston. I then moved on to Transamerica Business Credit, I worked there from 1992-2000 and developed a lender finance specialization and became national marketing manager.

In 2000, I joined Wells Fargo Capital Finance (formerly, Foothill Capital Corp.), and I was responsible for the launch of the Lender Finance Division, Resort Finance Division and acquired Castle Pines Capital, now the Supply Chain Finance division of WFCF. I would offer this advice: the best strategy is to work for long-term success, in your relationships and business.

Surround yourself with smart people and put them on your team, even if they don’t have the industry experience that most managers will insist upon. They will learn. Your most important asset is your team. Value them above all else. Be yourself. Be real.

I have been able to hire strong, diverse team members who have enabled us to avoid “group think.” This has been key to our success. TSL Michele Ocejo, editor-in-chief, The Secured Lender and CFA communications director.

have been extremely impressed with the level of commitment, the level of thoughtfulness, the analysis and the ideas that come from the individual committees. That’s what is going to propel the organization forward: getting the grass roots ideas and the grass roots involvement. Top down won’t work anymore.”

THE SECURED LENDER OCTOBER 2017 37

what

i

WOULD YOU DO?

n this edition of What Would You Do?, Overadvance Bank is being paid out of a distressed loan and, as part of the payoff, the Chief Credit Officer is asked to accept cash, rather than a letter of credit, to collateralize existing letters of credit issued by the Bank for the account of the distressed borrower.

Is Cash Always King?

Heading South Inc., a boutique clothing label, has been a client of Overadvance Bank for over five years.

Initially, Heading South performed well, fueled, in large part, by the success of its Sunny South line of men’s shorts. However, the popularity of the Sunny South has dramatically dropped over the last year. Unable to find a suitable replacement for its once-popular Sunny South brand, Heading South’s business, frankly, has been heading south.

Concerned with the rapid decline of Heading South’s business, which tripped a financial covenant in the loan agreement, Overadvance Bank required Heading South to either refinance the Bank’s debt, or pursue a sale of the business, within an agreed-upon timeframe pursuant to

38

a forbearance agreement.

Heading South’s investment banker, unfortunately, found lukewarm interest from potential buyers, as decreasing sales and stale brands have made Heading South a tough sell.

Luckily for Overadvance Bank, however, Heading South found another lender, Easy Money Bank, to repay in full Overadvance Bank. Although Easy Money Bank is well known to have a healthy appetite for risk, the Chief Credit Officer of Overadvance Bank is surprised that anyone, even Easy Money Bank, would be willing to finance Heading South, as Heading South appears to be heading into bankruptcy even with the prospect of new financing. Nevertheless, the Chief Credit Officer is not one to look a gift horse in the mouth and he is more than happy to be paid out by Easy Money Bank.

A week before the anticipated refinancing, Overadvance Bank sends its standard payoff letter for review.

The credit facility extended by Overadvance Bank to Heading South includes several letters of credit issued to various suppliers. As such, the payoff letter provides for Overadvance Bank to receive “back-to-back” letters of credit to hold as security for the outstanding letters of credit under the Overadvance Bank credit facility. However, a day before the refinancing is scheduled to close, Overadvance Bank receives a call from Heading South requesting that Overadvance Bank hold cash collateral, in lieu of back-to-back letters of credit, as collateral security for the outstanding letters of credit under the Overadvance Bank facility.

The Chief Credit Officer is not going to jeopardize a payout of a distressed deal by insisting the Bank’s existing letters of credit be collateralized with back-to-back letters of

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credit rather than cash. However, he thinks it possible, if not likely, that Heading South will wind up in bankruptcy within the next month or so.

In the event Heading South were to file for bankruptcy, the Chief Credit Officers seems to recall that there may be some benefit to holding back-to-back letters of credit, rather than cash collateral, as security for Heading South’s obligations with respect to the existing letters of credit.

If you were the Chief Credit Officer of Overadvance Bank, what would you do?

First, the Chief Credit Officer’s recollection is correct. If the Chief Credit Officer agrees to accept cash as collateral security for the existing letters of credit, and Heading South subsequently files for bankruptcy, the cash collateral held by the Bank to secure the existing letters of credit would be property of Heading South’s bankruptcy estate under Section 541 of the Bankruptcy Code. As such, upon Heading South’s bankruptcy filing, the automatic stay imposed under Section 362 of the Bankruptcy Code would prevent the Bank from applying the cash collateral to obligations arising from the existing letters of credit (such as reimbursing a draw under the letters of credit) without first obtaining approval from the bankruptcy court (i.e., obtain relief from the automatic stay). It is also possible that the Bank could find itself in a “cash collateral fight” with Heading South during the bankruptcy case if, for example, Heading South made a demand on the Bank to return the cash collateral to Heading South (as property of its bankruptcy estate — a scenario that generates an additional layer of risk and expense for the Bank.)

By contrast, letters of credit (and

the proceeds from any draws made thereunder) issued for the account of a bankrupt company are outside of the bankruptcy estate and not subject to the automatic stay. Meaning, if the Chief Credit Officer negotiates for back-to-back letters of credit in lieu of cash to secure the existing letters of credit, and then Heading South subsequently files for bankruptcy, the Bank would not need to obtain relief from the automatic stay to draw down under the back-to-back letters of credit and any amounts so drawn by the Bank could be freely applied to reimburse the Bank for any draws honored by the Bank under the existing letters of credit.

These benefits derive from the “independence principle” associated

with letters of credit, which provides that the issuer of a letter of credit has an absolute obligation to honor any valid draw under letter of credit, independent of any underlying obligation or transaction between the letter of credit beneficiary and the account party.

Clearly, there is a benefit for the Bank to receive back-to-back letters of credit, rather than cash, as collateral security for Heading South’s obligations to the Bank with respect to existing letters of credit. However, as mentioned above, the Chief Credit Officer is not going to risk a payoff in a distressed deal by insisting on back-to-back letters of credit rather than cash. He will certainly push for back-to-back letters of credit, but he

realizes that, even in the worst case scenario where he accepts cash and then Heading South files for bankruptcy, he is still better off than if he walked away from the payoff over this issue.

We hope you enjoyed the column and, of course, are always interested in your feedback. As such, if you have any scenarios you would like to see discussed in a future column, please let us know at Dfiorillo@otterbourg. com or Jcretella@otterbourg.com. TSL Dan Fiorillo and Jim Cretella are Members of the law firm Otterbourg P.C.

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locations: Atlanta, Baltimore, Boston, Chicago, Connecticut, New York, Philadelphia call: Warren Mino at (212) 806.4501 email: wmino@websterbcc.com *Source: National Information Center. All credit facilities are subject to the normal credit approval process. Webster Business Credit Corporation is a wholly owned subsidiary of Webster Bank, N.A. Member FDIC. The Webster symbol is a registered trademark in the U.S. ©2017 Webster Financial Corporation. All rights reserved.

Equal Housing Lender

THE SECURED LENDER OCTOBER 2017 39

legal notes

i

n this issue, CFA’s Co-General Counsel discuss a recent Third Circuit ruling that analyzes certain nonuniform UCC provisions dealing with security interests in oil and gas.

JONATHAN HELFAT AND RICHARD KOHN CFA CO-GENERAL COUNSEL In re SemCrude L.P., 864 F.3d 280 (2017) (Third Circuit holds that producers of oil did not possess an automatically perfected security interest in oil sold to third parties.)

A recent decision of the U.S. Court of Appeals for the Third Circuit provides an interesting lesson in the workings of the automatic perfection provisions of the Uniform Commercial Code favoring oil and gas producers in certain states.

Thousands of oil producers sold oil to two of SemGroup L.P.’s affiliates, SemCrude L.P. and Eaglwing, L.P. (collectively, the “SemCrude Companies”), which in turn resold the oil to various purchasers, including BP Oil Supply Company and J. Aron & Company (the “Ultimate Purchasers”), which bought oil from the SemCrude Companies on open account in 2007 and 2008. The SemCrude Companies also sold call options to the Ultimate Purchasers, giving them the right to purchase oil at a specific date and price in the future. In their contracts with the SemCrude Companies, the Ultimate Purchasers retained the right to set-off, against any amounts owing to the SemCrude Companies for purchases of oil, any amounts owing to the Ultimate

40

THE LEGAL SIDE OF ABL & FACTORING

Purchasers in respect of their call options.

The price of oil rose throughout 2007 and 2008, and the SemCrude Companies sold more options to cover the losses.

Eventually, the SemCrude Companies were unable to cover the margin requirements on the options. J. Aron & Company requested assurance of performance from the SemCrude Companies; however, the SemCrude Companies failed to provide the assurance, and J. Aron & Company called a default and set-off $345 million owing in respect of option trades against $435 million in oil purchases. SemGroup filed for chapter 11, triggering a default, and set-off, under BP Oil Supply Company’s agreement with the SemCrude Companies.

After the chapter 11 was filed, numerous oil producers sued the Ultimate Purchasers in federal and state courts, and the cases were transferred to the bankruptcy court. After extensive proceedings, the bankruptcy court recommended summary judgment in favor of the Ultimate Purchasers, the District Court adopted that recommendation and granted summary judgment, and the producers appealed to the U.S. Court of Appeals for the Third Circuit. The Third Circuit affirmed the grant of summary judgement in favor of the Ultimate Purchasers.

The producers located in Texas and Kansas argued, among other things, that they had an automatically perfected security interest in the oil sold to the Ultimate Purchasers. Both the Texas UCC and the Kansas UCC provide for a security interest “in favor of interest owners, as secured parties, to secure the obligations of the first purchaser of oil and gas production, as debtor, to pay the purchase price,” and further provide that such security interest is automatically perfected without the need to file a UCC-1 financing statement.

(Tex. Bus. & Com. Code § 9.343; Kan. Stat. § 84-9-399). These producers took the position that their security interest continued in the hands of the Ultimate Purchasers.

However, the Court found that this provision was overridden by other provisions of the UCC. First, the Court noted that the

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same section of the Texas and Kansas UCC also provided that “[t]he rights of any person claiming under a security interest or lien created by this section are governed by the other provisions of this chapter except to the extent that this section necessarily displaces those provisions.”

(Tex. Bus. & Com. Code § 9.343(p); Kan. Stat. § 84-9-339a(o)). The Court then looked to the basic conflict-of-laws provision of both UCCs (UCC 9-301), under which perfection, the effect of perfection or nonperfection and the priority of a security interest are governed by the law of the debtor’s state of organization, which in this case was either Delaware or Oklahoma. The UCC in neither of those states granted an automatically perfected security interest in favor of oil and gas producers.

The Court noted that the only possible exception to the basic conflict-of-laws rule of § 9-301 would be § 9-301(4), which provides that the perfection, the effect of perfection or non-perfection and priority of a security interest in “as-extracted collateral” is governed by the jurisdiction in which the wellhead or minehead is located. However, the Court observed that this possible exception only applies where the debtor has a preexisting interest in the oil before it is extracted at the wellhead – a circumstance that did not exist in this case, since the SemCrude Companies only acquired an interest in the oil after it had been extracted.

The Court also found that nothing in the sections of the Texas or Kansas UCC “necessarily displaces” the basic conflict-of-laws rule embodied in § 9-301.

Finally, the Court made the point that permitting the producers to have a security interest in the hands of the Ultimate Purchasers would create tremendous “burdens and uncertainty” in the marketplace, given that the SemCrude Companies resold oil from thousands of producers located in eight states. TSL Jonathan N. Helfat, partner, Otterbourg P.C., and Richard M. Kohn, partner, Goldberg Kohn, are CFA co-general counsel.

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ANNUAL CONVENTION EXHIBITION GUIDE 2017 NOVEMBER 8 – 10, 2017 SHERATON GRAND CHICAGO CHICAGO, IL INTEGRATED SOLUTIONS TARGETED REACH POWERFUL RESULTS

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EXHIBIT HALL FLOOR PLAN

CFA 73RD ANNUAL CONVENTION NOVEMBER 8-10, 2017 | SHERATON GRAND CHICAGO Registration Booth

LIST OF BOOTHS CURRENTLY TAKEN: ABLSoft Inc. (14)

#108

Accounts Receivable Insurance (ARI) (9)

#208

All American Document Services LLC (13)

#211

Alleon Healthcare Capital (19)

#210

Bluechip Asset Management (2)

#213

CODIX (14)

#112

Corporation Service Company* (13)

#201

Cortland Capital Markets Services LLC (16)

#207

Cync Software (14)

#217

DAT Solutions (13, 14)

#203

Dopkins ABL Consulting Services (1, 7, 11)

#216

Finvoice, Inc. (14)

#115

Freed Maxick ABL Services (7)

#106

Gemino Healthcare Finance (14)

#215

Global Verification Network (19)

#212

Heartland Investigative Group (19)

#109

HPD Software, LLC (14)

#200

International Factoring Association (IFA) (19)

#101

Liquid Asset Partners (2)

#107

Maynards Industries (2)

#113

POPin Mobile Video (14)

#111

ProfitStars (14)

Entrance

Entrance

#103 & 105

RapidAdvance (6)

#202

Sherwood Partners, Inc.| agencyIP, LLC (18)

#214

Shutts & Bowen LLP (3)

#204

Thomson Reuters (19)

#205

UCC Plus Insurance - Fidelity National Title Group (9) #209 William Stucky & Associates, Inc. (14)

#206

Wolters Kluwer - Lien Solutions* (14)

#117

CODES: (1) Accountant (2) Appraiser/Auctioneer/Liquidator (3) Attorney (4) Broker (5) Community Bank (6) Entrepreneurial Finance & Factoring (7) Field Examination (8) Hedge Fund (9) Insurance (10) International ABL & Factoring (11) Middle Market ABL (12) Private Equity Firm (13) Search, Filing & Document Retrieval (14) Software (15) Supply Chain Finance (16) Syndicated ABL/Capital Markets (17) Traditional Factoring (18) Turnaround Management (19) Other * Both Sponsor & Exhibitor

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73RD ANNUAL CONVENTION EXHIBITOR GUIDE EXHIBITOR LISTINGS AS OF SEPTEMBER 15, 2017

ABLSoft Inc. (14), Booth #108 856 Mitten Road, Suite 105, Burlingame, CA 94010 Nancy Lee, General Manager, (866) 632-7146 X3 E-mail: nlee@ablsoft.com www.ablsoft.com

ABLSoft, Inc. is pleased to introduce RadarONE, a software platform that supports a variety of asset classes including factoring, asset-based lending, purchase order, equipment, and inventory in one sleek, single system-of-record. From prescreening to trending, the RadarONE platform manages and monitors your entire portfolio with the utmost flexibility.

ABLSoft, Inc. is a pioneer in the development of enterprise scalable Web-based solutions. For over 20 years, its software development team has provided innovative, yet flexible, browser-based solutions for companies ranging from venture startups to Fortune 500 companies in the financial, healthcare and telecommunications industries.

Accounts Receivable Insurance (ARI) (9), Booth #208 1311 N. Westshore Blvd., Ste. 315, Tampa, FL 33607 Joel Freedman, Director of Marketing, (813) 288-8680 E-mail: joel@ariglobal.com www.ariglobal.com

ARI Global is an independent brokerage firm specializing in accounts receivable insurance. In business since 1996, ARI has over 150 years combined experience with offices throughout the United States. ARI accesses all accounts receivable insurance carriers – domestic and foreign – ensuring clients their best insurance value. Prompt, responsive service and customer satisfaction have earned ARI recognition as an “Elite Broker”, a distinction held only by the best agencies.

All American Document Services LLC (13), Booth #211 701 South East 32nd Court, Ste. 206, Fort Lauderdale, FL 33316 Al Mahfudh, President, (404) 736-3720 E-mail: al@allamericandocs.com www.allamericandocs.com All American Document Services provides search and abstraction of a wide range of documents essential to factoring companies and others serving the corporate, financial, and lending world. We offer legal due diligence and courthouse retrieval services; UCC searches; judgment, lien, bankruptcy, 44

I 73rd ANNUAL CONVENTION I 2017 EHIBIT GUIDE

civil and criminal searches; corporate searches; registered agent services, process of service, and skip tracing. With our record of outstanding customer service, accurate investigations, rapid turnaround times, and paperless delivery, we have helped to reduce clutter and streamlined operations for our loyal customers since 2002.

ALLEON

HEALTHCARE

CAPITAL

Alleon Healthcare Capital (19), Booth #210 145 Cedar Lane, Ste. 220, Englewood, NJ 07631 Ben Maylar, Vice President of Operations, (201) 340-6347 E-mail: benm@alleoncapital.com www.alleonhealthcare.com

Alleon Healthcare Capital (AHC) is a medical accounts receivable financing/factoring company. Alleon funds any medical provider that bills Medicare, Medicaid, commercial insurance, private insurance, no-fault/PIP, workers compensation and personal injury, I.E. doctors, DME/HME, chiropractors, orthopedic surgeons, MRI centers, drug/alcohol centers, home healthcare companies, labs, urgent care centers and more.

asset management Bluechip Asset Management (2), Booth #213 11811 E. Maplewood Ave., Greenwood Village, CO 80111 Chris Nugent, Managing Director, (415) 515-1110 E-mail: chris.nugent@bcamasset.com www.bcamasset.com

Bluechip Asset Management is an appraisal, asset management services and valuation company specializing in services for the equipment finance industry. Staff appraisers have over 25 years of experience in machinery and equipment appraisals, spanning a wide variety of assets from basic industry: covering construction, high technology, medical, mining, processing, rail, transportation and diverse assets.

CODIX (14), Booth #112 1230 Peachtree Street, Ste. 1900-PMB208, Atlanta, GA 30309 William Quinn, Managing Director, (404) 790-0998 E-mail: bquinn@codix.us www.codix.us/cf

CODIX is a software provider with branches in France, Bulgaria, USA, Vietnam, Tunisia, Mexico & Spain. The product offering

(called iMX) is a global, powerful and flexible event-based IT solution that provides an all-in-one package for any kind of commercial finance activity: factoring (traditional/reverse/ international/etc), invoice discounting, ABL, supply chain finance, leasing, credit insurance. With full multilingual and multicurrency abilities, and based on the latest available technologies, iMX includes all the most advanced business functionalities to cover the needs of a commercial finance company. It also includes native integration of all the tools needed to improve global productivity like an Extranet, telephony, imaging and a decisional environment. CODIX also ensures all the implementation services provided by both business and technical experts, delivering turn-key systems that are totally customized to cover 100% of its client needs, with assurances around a fixed price/fixed time offer.

cync

and enhanced custody. These solutions support client strategies for managing and lending on assets in the syndicated bank loan, assetbacked loan, middle market, real estate, business loan, structured finance, equity and other capital markets.

R

R

R

Corporation Service Company (13), Booth #201 33 N. LaSalle St., Ste. 2320, Chicago, IL 60602 Melissa Davis, Event Manager, (800) 927-9800 E-mail: mdavis@cscinfo.com www.cscglobal.com EXHIBITOR AND SPONSOR CSC® provides knowledge-based solutions for every phase of the business life cycle, helping businesses form entities, maintain compliance, execute transaction work, and support real estate, M&A, and other corporate transactions in hundreds of U.S. and international jurisdictions. We work with some of the world’s largest banks and commercial lenders to reduce risk in their lien portfolios, improve their transaction speeds, and create a secure environment for their financial processing needs. We also provide solutions for secure real estate document preparation and recording. We are the unwavering partner for 90% of the Fortune 500®, nearly 10,000 law firms, and more than 3,000 financial organizations. Headquartered in Wilmington, Delaware, USA, since 1899, we are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve.

Cortland Capital Markets Services LLC (16), Booth #207 225 W. Washington Street, Ste. 2100, Chicago, IL 60606 Leah Bates, Sales and Marketing Associate, (312) 380-1941 E-mail: leah.bates@cortlandglobal.com www.cortlandglobal.com

Cortland is an independent investment servicing company providing third-party and outsourced administrative solutions to leading investment managers, commercial lenders and institutional investors in the global capital markets. Company services include fund administration, leveraged loan services, business loan servicing,

Cync Software (14), Booth #217 3505 E. Frontage Rd., Ste. 175, Tampa, FL 33607 Lydia Taylor, Sales Director, (727) 538-2250 X311 E-mail: ltaylor@cyncsoftware.com www.cyncsoftware.com

Cync Software, a brand of NDS Systems, is a SaaS or on-site application for providing loan monitoring and servicing for the commercial lending market in real time and with accurate information.

Cync automates the exchange of information between borrowers and lenders in the commercial lending market to improve the accuracy of data submitted, and to increase the efficiency and productivity of both borrowers and lenders. With our deep software domain expertise, we seek to develop innovative software products by leveraging the latest technologies in Cloud, mobility and analytics.

The Cync Software suite provides a diverse collection of software financing solutions that covers a vast range of accounts receivable financing, factoring, working capital loans, asset-based lending and related credit services. By streamlining, standardizing and automating the collection and analysis of borrowers’ financial information, the Cync Application suite provides a complete solution for commercial finance companies, national, regional & community banks, asset-based lenders, A/R financing companies, and factors to track and monitor all aspects of their commercial lending portfolio. Our smart and dedicated team of professionals is committed to delivering the best quality solutions, customer service, support and efficient processes to the commercial lending community. We value our clients and will continue to enhance our product and reputation by providing sophisticated, cutting-edge monitoring tools for our clients’ commercial portfolios.

DAT Solutions (13, 14), Booth #203 8405 SW Nimbus Ave, Beaverton, OR 97008 Gary Land, General Manager, (972) 872-2136 E-mail: gary.land@dat.com www.dat.com

DAT Solutions provides asset-based lending services to Fortune 500 companies and other businesses including banks and other financial institutions, legal advisors, and other legal parties involved in the transfer of transportation assets from one legal entity to another or refinancing an asset portfolio by adding liens.

Our clients speak to the breadth of our experience as well as our professionalism. Previously the commercial unit of TransCore, DAT Solutions became a self-standing business unit of Roper Industries (NYSE:ROP) this year. DAT Solutions has been serving various facets of the transportation industry since 1978.

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73RD ANNUAL CONVENTION EXHIBITOR GUIDE

Dopkins ABL Consulting Services (1, 7, 11), Booth #216 200 International Drive, Buffalo, NY 14221 Joseph Heim, Partner, (716) 634-8800 E-mail: jheim@dopkins.com www.dopkins.com

Dopkins ABL Consulting specializes in performing pre-loan surveys, recurring collateral field examinations and other duediligence procedures to the ABL industry. Led by Certified Fraud Examiners and licensed CPA’s, the firm is strategically located throughout North America with full-time, experienced field examiners.

Dopkins ABL Consulting developed and authored the revised curriculum for the CFA’s Field Examiner School and frequently conducts seminars and industry panels on field examinations, due diligence, fraud and white-collar crime.

Frustrated by poor report turnaround, inexperienced examiners or the lack of value-added information? Learn how the professionals at Dopkins ABL Consulting Services have helped asset-based lenders deal with these issues when outsourcing field examinations.

Finvoice, Inc. (14), Booth #115 1225 Fulton Street, San Francisco, CA 94117 Andrew Bertolina, Chief Executive Officer, (310) 951-0596 E-mail: andrew@finvoice.co www.finvoice.co

Finvoice provides easy to use, modern lending software to the factoring / asset-based lending industry with advanced analytics and state of the art data integrations that allows lenders to onboard borrowers and process them in minutes.

Finvoice is a Silicon Valley based company with a team from Cambridge, Stanford and Harvard.

Freed Maxick ABL Services (7), Booth #106 424 Main Street, Ste. 800, Buffalo, NY 14202 Howard Rein, President, (716) 847-2651 E-mail: howard.rein@freedmaxick.com www.freedmaxick.com

Freed Maxick ABL Services, LLC is one of the nation’s largest providers of ABL field exam outsourcing services to assetbased lending and other financial institutions that have granted loans, increased credit lines, reduced credit lines, or reduced loan loss exposure. Our objective is to assist lenders in evaluating the integrity of their customers’ collateral by performing pre-loan surveys and rotational collateral monitoring field examinations.

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We have also helped provide direction for an orderly liquidation of operations. Our service is designed to help supplement your asset-based lending department with high level expertise and manpower on short-term notice, so as to assist the lender in protecting its assets and collateral.

Communication is maintained with the lender throughout all phases of the fieldwork. We have a national footprint of examiners with extensive industry experience and industry exposures.

Gemino Healthcare Finance (14), Booth #215 3535 Roswell Road, Ste. 24, Marietta, GA 30068 Mark O’Brien, EVP - Business Development & Underwriting, (770) 321-4033 E-mail: mark.obrien@gemino.com www.gemino.com

Gemino Healthcare Finance is one of the oldest and most respected healthcare-only lenders in the country, providing asset-based financing solutions to small and mid-size healthcare providers throughout the United States. With over 50 years of combined senior management healthcare finance expertise, Gemino provides revolving lines of credit, senior term loans, and real estate loans from $2 to $20 million for working capital, acquisitions and refinancings. Gemino’s collaborative approach begins with initial conversations and continues throughout all phases of the relationship.

Global Verification Network Global Verification Network (19), Booth #212 PO Box 95258, Palatine, IL 60095 Christian Moore, COO, (312) 548-0692 E-mail: cmoore@globalver.com www.globalver.com

Global Verification Network is a screening and investigations company which specializes in employment background checks, tenant screening and vetting (investigative) services for organizations who wish to know more about the people or entities they encounter in the course of their normal business transactions. Global Verification Network is affiliated with the RedRidge family of companies including RedRidge Finance Group, RedRidge IT Services and ExWorks Capital.

The International Factoring Association (IFA) is the world’s largest and most respected association serving the factoring and receivable finance industry. Founded in 1999, we have grown to over 400 member companies worldwide. Some of the services that we offer include training courses, meetings, conferences, certification, magazines, legal consulting, lead generation, membership discounts, job board and networking.

Heartland Investigative Group (19), Booth #109 1717 University Ave. West, Saint Paul, MN 55104 Mark MacLean, Director of Business Development, (612) 703-5959 E-mail: mmaclean@heartlandinfo.com www.heartlandinfo.com

Heartland Investigative Group had amassed a team of financial and investigative experts that understands the complexities of finance regulations and how to meet their stipulations. We do it thoroughly and quickly, saving you valuable hours and resources. Since 1995 Heartland has completed over 10,000 due diligence projects for many of the leading financial institutions, venture firms, hedge funds, and mezzanine lenders.

HPD Software, LLC (14), Booth #200 735 Tank Farm Road, Ste. 250, San Luis Obispo, CA 93401 Patrick DeFors, Head of Marketing, Communications and PR, +44(0)20 8780 6800, E-mail: Patrick.DeFors@hpdsoftware.com www.hpdsoftware.com

HPD Software provides software to commercial lending and factoring operations around the world. HPD maintains their headquarters in London, England with offices in Sydney, Australia and San Luis Obispo, CA in the USA. As a global leader in finance software, HPD has over 30 years of experience in helping clients monitor and grow their portfolios. Our most recent product, Aquarius, is gaining wide acceptance throughout the industry. Aquarius supports multilanguage, multi-cultural, and multi-currency lending environments.

HPD has recently released a new data mining software, Gemini. This application enables lenders to draw collateral data directly from their clients’ accounting systems, resulting in increased efficiency and improved risk management. Our asset-based lending product, ABLE, is a portfolio management software with comprehensive asset based lending capabilities for you and your clients. It is designed to handle a complete range of standard ABL financing while also being flexible enough to cover diverse and complex loan structures.

International Factoring Association (IFA) (19), Booth #101 6627 Bay Laurel Place, Ste. C, Avila Beach, CA 93424 Bert Goldberg, Executive Director, (805) 773-0011 X302 E-mail: bert@factoring.org www.factoring.org

Liquid Asset Partners (2), Booth #107 4060 29th Street, Grand Rapids, MI 49512 Jennifer Steward, Business Development, (616) 719-5917 E-mail: jennifer@liquidap.com www.liquidassetpartners.com

Since 1974 the team from Liquid Asset Partners runs liquidations, auctions, and appraisals for banks, retailers, bankruptcy courts, trustees, manufacturers, and lenders. We make cash acquisitions, guarantees, or run commission-based disposition sales in retail, industrial, wholesale, motorsports & equipment. With a team of over 100 consultants we can be at any location with only 48 hours’ notice.

Liquid Asset Partners disposition deal range is from $50k to $20 million. Some of our most notable projects include the acquisition and restart of manufacturing of the EBR Motorcycle company (Buell), the liquidation of Circuit City’s headquarters and 8 distribution centers (over $60mm of assets), the 150 store merchandise liquidation of InkStop stores ($16mm of inventory), the Barcalounger Recliner factory (1 million sq. ft. facility), Harley Davidson’s Buell factory liquidation, and ongoing work with Wal-Mart. Our appraisal division works regularly with banks and workout groups to quickly and accurately appraise business assets in all 50 states and Canada. Our appraisal team holds CEA and ASA certifications from the AMEA and the American Society of Appraisers.

Maynards Industries (2), Booth #113 21700 Northwestern Hwy, Ste. 1180, Southfield, MI 48075 Jeff Miller, Director of Valuation Services, (248) 514-3415 E-mail: jmiller@maynards.com www.maynards.com

Maynards manages asset auctions and asset valuation projects valued up to half a billion dollars from eight permanent offices in Canada, the United States, Europe, Japan and China. As auctioneers with an established global presence and familiarity with the international marketplace, we provide project management and sales services wherever a client’s assets are located. Since 1902, the company has specialized in the asset conversion of commercial inventories and industrial equipment, and provided comprehensive asset valuation services for collateral-based lending, asset disposition and acquisition.

Industry sectors of particular expertise for our auctioneers include automotive manufacturing, sawmill, woodworking, pulp & paper, plastics, retail/commercial, mining, and metal fabrication.

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73RD ANNUAL CONVENTION EXHIBITOR GUIDE

POPin Mobile Video (14), Booth #111 9950 South 300 West, Salt Lake City, UT 84070 Jed Taylor, President, (801) 417-9000 E-mail: jtaylor@popinmobile.com www.popinmobile.com

POPin Mobile Video allows you to extend your digital channel capabilities with interactive video and collaboration features such as, video and texting while in a session, sharing documents and agreements, and immediately receiving documents from clients.

based finance partners utilize our gap financing to obtain new customers and expand existing relationships.

We provide funding for mobilization, work in progress, inventory, purchase orders, supplier deposits, as well as bonded, third party medical and consumer A/R. Direct lender of over $500 million to tens of thousands of business owners. Funds within 7 days. BBB accredited and A+ rated.

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ProfitStars (14), Booth #103 & 105 1025 Central Expressway South, Dallas, TX 75013 Jacqueline Schneider, Marketing Director (770) 752-6410 E-mail: jschneider@jackhenry.com www.profitstars.com

Sherwood Partners, Inc.| agencyIP, LLC (18), Booth #214 1100 La Avenida, Mountain View, CA 94043 Martin Pichinson, Managing Partner, (650) 454-8001 E-mail: mdp@shrwood.com www.shrwood.com

RapidAdvance (6), Booth #202 7316 Wisconsin Avenue, Ste. 350, Bethesda, MD 20814 4500 East West Highway, Bethesda, MD 20814 Gina Mackenzie, Director of Strategic Partnership, (973) 580-0497 E-mail: gmackenzie@rapidadvance.com www.rapidadvance.com

Shutts & Bowen LLP (3), Booth #204 200 S. Biscayne Blvd, Ste. 4100, Miami, FL 33131 Ally Prieto, Marketing Manager, (305) 415-9074 E-mail: aprieto@shutts.com www.shutts.com

ProfitStars’ Commercial Lending Solutions help financial institutions and alternative finance companies expand commercial credit, increase their spread through higher returns, and outpace the competition through the solutions of the Commercial Lending Center Suite™: Commercial Lending Management System™, FactorSoft®, Commercial Lending FinancialCenter™, Commercial Lending BusinessCenter™ BusinessManager®, and LendingNetwork®. As a diverse, global division of Jack Henry & Associates, Inc.® (JHA), ProfitStars combines JHA’s solid technology background with the latest breakthroughs in six performance-boosting solution groups – Financial Performance, Imaging, JHA Payment Solutions, Information Security & Risk Management, Retail Delivery, and Online & Mobile. Explore the power of ProfitStars-enhanced performance at www.profitstars.com.

DECLINING DEALS DUE TO COLLATERAL SHORTFALL OR CREDIT? OVER-ADVANCE REQUESTS FROM CLIENTS? UNSUBORDINATED INSTRUMENTS IN THE WAY OF CLOSING DEALS? RapidAdvance, a leading provider of subordinated, non-collateralized working capital financing, can help you with inadequate/unacceptable collateral and weak credits. Asset48

I 73rd ANNUAL CONVENTION I 2017 EHIBIT GUIDE

Since 1992, Sherwood Partners, Inc. has developed deep financial advisory solutions and has become one of the premier consulting, restructuring and workout firms in the country, today. Sherwood has built an excellent reputation in the venture capital, private equity, banking and legal communities. We are a full service advisory firm specializing in board and corporate advisory services, due diligence, business assessment, corporate restructuring, crisis management, corporate finance, debt restructuring, asset liquidation, bankruptcy advisory services, Assignments for the Benefit of Creditors (ABCs) and solution implementation. www.shrwood.com agencyIP represents owners and creators of patents, trademarks and copyrights. Our team not only finds ways to monetize the IP, but has been successful in finding new and creative additional uses for the IP. agencyIP is an exclusive agent for IP owners and creators. We do not own IP and therefore there is no conflict. www.agencyip.com

Established in 1910, Shutts & Bowen is a full-service business law firm with more than 260 lawyers with offices in Fort Lauderdale, Jacksonville, Miami, Orlando, Sarasota, Tallahassee, Tampa and West Palm Beach. Learn more about Shutts & Bowen at www.shutts.com.

Thomson Reuters (19), Booth #205 610 Opperman Drive, Eagan, MN 55123 Barb Maslowski, Client Coordinator, (651) 687-7000 E-mail: barb.maslowski@tr.com www.thomsonreuters.com

Thomson Reuters provides a full-spectrum suite of solutions to address the most pressing fraud prevention and risk mitigation issues present in today’s marketplace CLEAR makes it easier to locate people, assets, businesses, affiliations, and other critical facts. With its vast collection of public and proprietary records, investigators are able to dive deep into their research and uncover hard to find data.

Additionally, CLEAR helps you save time by streamlining your research, gathering investigative content into a single, intuitive, customizable environment allowing you to search data and view results in a layout that matches your work method WorldCheck is a best-in-class Global screening solution covering 240+ Countries & territories and monitoring over 530 sanction, watch, regulatory and law enforcement lists. Boasting hundreds of research analysts based across all global regions and speaking more than 60 local languages and a network of 100,000 reputable sources to collate information that goes beyond official sources, WorldCheck delivers the Global widest financial crime related coverage available.

Live gateway access and Real-time Incarceration Arrest records provides you the most reliable, comprehensive, and up-to-date data for your investigative and due diligence needs.

Additionally, the millions of records are always cited and sourced for full transparency to help you analyze your research.

Court Express helps you uncover a deeper legal history through document retrieval and due diligence services. Promptly retrieving key documents that are not available online—from anywhere in the US—to perform through and complete duediligence background checks.

omissions and errors in the search and filing process. This results in increased credit quality, reduced secured lender risk, and greater transaction transparency.

UCCPlus insures the secured lender’s security interest in commercial loans and loan portfolios for validity, enforceability, attachment, perfection and priority. Most importantly, a UCCPlus Policy protect against fraud, forgery, documentation defects and search office errors and omissions. A UCCPlus Policy includes all necessary UCC search and filing functions. Like all insurance, a UCCPlus Policy provides for cost-of-defense in the event of a third party challenge to the insured secured lender’s lien perfection and priority.

William Stucky & Associates, Inc. (14), Booth #206 One Embarcadero Center, Ste. 1330, San Francisco, CA 94111 Rosanne Doyle, Vice President, (415) 788-2441 X38 E-mail: rosanne.doyle@stuckynet.com www.stuckynet.com WSA develops and markets the most widely used asset-based lending software in the industry. WSA has been in business since 1979 and has an experienced team to meet your needs. Software systems to be exhibited this year are: ABLM.NET and StuckyNetLink.NET, NovaCS.NET Factoring System, Stratus.NET Factoring System, and NOVA Commercial Lending.

EXHIBITOR AND SPONSOR

UCC Plus Insurance Fidelity National Title Group (9), Booth #209 10 S. LaSalle St., Ste. 3100, Chicago, IL 60601 Gary M. Zimmerman, Senior Vice President & Chief Underwriting Counsel, (312) 223-2441 E-mail: gary.zimmerman@fnf.com www.uccplus.com

Fidelity National Title Group’s UCCPlus Risk Management Program provides lien perfection and first priority collateral protection for secured lenders. Commercial lenders view UCCPlus Insurance as a credit enhancement for their commercial loans. The issuance of a UCCPlus Lender’s Policy of Insurance reduces operational risk (and a potential related loss) caused by inadequate documentation, perfection and priority defects, and

Wolters Kluwer – Lien Solutions (14), Booth #117 2929 Allen Parkway, Houston, TX 77019 Robert Zurek, Marketing Manager, (713) 533-4616 E-mail: robb.zurek@wolterskluwer.com www.wolterskluwer.com

Wolters Kluwer is a global company that provides information, software, and services. Our customers are legal, business, tax, accounting, finance, audit, risk, compliance, and healthcare professionals. Lien Solutions is the nation’s leading lien services partner. Supported by our global parent company Wolters Kluwer, we combine the talent and effort of our subject matter experts with technology that creates powerful simplicity, to deliver the industry’s most accurate and thorough lien-related due diligence, perfected filings and portfolio management.

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CFA NEWS IN PRINT

Austin Financial Services, Inc. (AFS) strengthens its portfolio and operations team with the hiring of two new employees: Michael Patterson joined as vice president, auditor in Los Angeles and Lance Gillis joined as senior vice president, portfolio representing AFS’s expansion into the Mountain Region.

Jason Anish, president & CEO, said, “We are excited to have Mike and Lance join our team. As we continue to grow and expand our presence, these additions will add strength and experience to our portfolio management and audit departments.”

Headquartered in Los Angeles and with a nationwide lending focus, Austin Financial Services (AFS) is a privately held middle-market lender who’s been providing alternative funding in the form of fast and flexible lines of credit to small- and mediumsized businesses for over 35 years. Austin specializes in asset-based lending solutions which include: revolving lines of credit and term loans secured by AR, inventory, and equipment for businesses in a turnaround or growth mode with revenues from $4MM to $100MM and borrowing needs under $10MM. Bank of America: Andy Crask has been appointed as market president, serving as the company’s enterprise leader in Indianapolis. In addition to his market president role, Crask was also named the market executive for Business Banking for Indiana.

In his market president role, Crask will work across the Indianapolis region to con-

nect businesses, families and individuals to Bank of America’s banking and investment teams. He will also lead the effort to direct Bank of America’s resources in the market and the region to address local priorities and help build strong communities.

“Andy’s knowledge of the Indianapolis market and leadership as market president will ensure we’re helping to make our customers’ and clients’ financial lives better, through the power of every connection we can make with them,” said Brian Moynihan, chief executive officer, Bank of America.

Prior to being appointed Business Banking market executive, Crask was a senior relationship manager for Global Commercial Banking in the Midwest region.

He began his financial career in 2000 with LaSalle Bank. He has held various relationship management positions within Bank of America.

Bay View Funding: Bob Seidenberger joined as vice president, regional sales manager, based in Bethlehem, PA. Seidenberger will represent Bay View Funding in the Philadelphia area and surrounding markets.

Seidenberger joins Bay View Funding with over 30 years of middle-market financial sales and marketing experience. Most recently, Seidenberger was vice president of a cash flow/residual-based lending finance company and prior to that was managing director of an asset-based lender. He attended The Pennsylvania State University where he earned a Bachelor of Science in accounting.

Seth Herman, senior vice president and national sales manager of Bay View Funding, commented, “We are excited to have Bob join our team. His past experience and proven track record in assisting companies around the country with their funding needs will be invaluable as Bay View Funding continues to build upon its national presence.”

BBVA Compass: Çagrı Süzer was appointed as head of Retail Banking and Jorge Ortiz as

head of engineering, roles that are crucial to the bank’s efforts to achieve excellence in customer experience through digital transformation and branch banking.

In their roles, Süzer and Ortiz join the BBVA Compass Management Committee, reporting directly to BBVA Compass president and CEO Onur Genç. According to Genç, the two are filling roles that are critical to achieving the bank’s strategic priorities.

“BBVA Compass has come far in its efforts to become one of the top commercial banks in the U.S. having completed integration of several banks and put into place a new core operating system. Now we are ready for the next stage of growth,” he said. “Çagrı’s experience in leading the payments operations of Garanti, Turkey’s second largest bank with more than 950 branches, and Jorge’s first-hand understanding of the bank’s global engineering and technology operations will help us realize our ambitions and capitalize on our aspirations.”

In his role, Süzer will be responsible for BBVA Compass’ retail network, with a specific focus on delivery, execution and sales and their corresponding impact on customer experience. He will oversee Retail Sales, Business Planning, Mortgage and Payment Systems.

This role is Süzer’s second assignment under BBVA. Previously, Süzer was the executive vice president of marketing and digital for BBVA’s Garanti Payment Systems, with responsibility for management of nearly 10 million units in its credit and debit card portfolio. Süzer also oversaw product and branches, CRM and data analytics and digital experience and sales.

Süzer started at Garanti Payment Systems in 2013 as marketing director, moving to executive vice president of marketing two years later and executive vice president of marketing and digital just one year after that. Prior to Garanti, Süzer was at McKinsey & Company rising to engagement manager. He started his career at Danone.

Ortiz rejoins BBVA Compass as the head of engineering where he holds responsibil-

THE SECURED LENDER OCTOBER 2017 51

the cfa brief

ity for the company’s overall information technology strategy. He directly oversees application systems, telecommunications and systems operations, and manages bank operations, including central operations, loan operations, item processing and trust operations, as well as corporate security and transformation coordination.

Previously, Ortiz had spent five years as director of Information Technologies and head of Design and Development at BBVA Compass where he directed the design and development activities for core banking applications and digital banking. Ortiz left the role when he was promoted to director of IT Operations and Technical Services for BBVA, based in Mexico City, Mexico, providing core banking services for five BBVA institutions in Mexico, the U.S., Colombia, Peru and Chile.

Ortiz began his career with BBVA in Puerto Rico where he was the vice president of Technology and Operations for the bank’s Puerto Rico operations. Immediately prior to assuming his new position at BBVA Compass, Ortiz was the head of Infrastructure and Communication at the BBVA Group in Madrid, Spain, where he was responsible for infrastructure and communications services and strategy worldwide.

CIT Group Inc. announced two key appointments to their Equipment Finance division to support the growth of its industrial market segments. Maurice Smith will cover the Eastern territory and Susan Taldone will cover the Midwest territory of the U.S. Both Smith and Taldone are responsible for originating and managing dealer and distributor relationships in the construction, agriculture, material handling and transportation industries.

“With these hires, we continue our expansion plans to add resources throughout the country to better serve our manufacturer and dealer clients,” said Harold Ray, industrial commercial leader of CIT’s Equipment Finance business. “Their experience and long-standing relationships

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in the industrial sector provide them with the expertise to structure commercial customer finance programs for manufacturers and distributors.”

Smith joins CIT from PNC Bank. He has more than 10 years of experience in industrial financing for small-to-middle ticket construction and transportation businesses. Taldone joins from Bank of the West and has over two decades of experience in commercial client financing of construction, material handling, and transportation assets.

Crestmark: Michelle Belcher was appointed as CRM project manager, officer; a newly created position to enhance business practices and data management across the company. As a certified advanced administrator for Salesforce, a leading customer relationship manage-

ment (CRM) platform, and with more than 25 years of extensive experience integrating technology and business processes within financial institutions, Belcher will bring her expertise to Crestmark to better streamline sales, service, technology and marketing.

With an MBA in finance, a bachelor’s degree in accounting, and leadership in technology-finance integration, Belcher will draw on her expertise to help Crestmark maximize the Salesforce system. Prior to joining Crestmark, Belcher served in various business systems analyst and process management roles at Flagstar Bank, Huntington Technology Finance, Macquarie Equipment Finance, CIT Systems Leasing, AT&T Systems Leasing Corp., and CIS/CMI Corp. Most recently, Belcher was a lead business analyst at Flagstar Bank, where she was instrumental in implementing the Salesforce CRM

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system to improve workflow processes.

Based in Crestmark’s corporate offices in Troy, Belcher will serve all Crestmark divisions across the country.

Celtic Capital Corporation: Shane O’Grady has joined as senior vice president – client development. O’Grady has been in the asset-based lending community the past five years and will be covering the Arizona, Colorado, Utah, New Mexico and Nevada markets for Celtic Capital. Prior to his asset-based lending experience, O’Grady worked in the alternative capital markets, investment banking and mortgage fields.

O’Grady can be reached at (480) 209-5400 or sogrady@celticcapital.com.

Citizens Bank has hired Joseph C. Giampetroni as regional executive for the Midwest with responsibility for corporate banking in the greater Chicago area, Michigan and Ohio. Giampetroni joins Citizens with extensive banking experience in advising and handling the banking needs of corporate banking clients throughout the Midwest.

“The Midwest region represents an area where we have a very attractive opportunity to grow our business,” said Donald H. McCree, vice chairman and head of Commercial Banking at Citizens. “Joe is well-positioned to draw on his experience and network to bring innovative solutions to our clients in the region.”

Giampetroni has a strong track record of advising and managing key client relationships and is a proven leader in the Midwest region. Most recently at U.S. Bank, he headed up the Midwest Corporate Banking Division. Prior to that he held senior management roles at Wells Fargo and JP Morgan Chase where he led teams and managed key client relationships and portfolios in several Midwest geographies.

Giampetroni is a native of Southeast Michigan and earned a bachelor’s degree in finance and economics from Eastern Michigan University.

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Citizens is well positioned as a strategic and financial partner, offering deep expertise, great ideas and seamless deal execution. The Citizens Commercial Banking approach puts clients first, and offers solutions that help clients make the best decisions throughout the life cycle of their business.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $150.3 billion in assets as of March 31, 2017. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. In Consumer Banking, Citizens helps its retail customers “bank better” with mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,200 ATMs and approximately 1,200 Citizens Bank branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Citizens also provides wealth management, mortgage lending, auto lending, student lending and commercial banking services in select markets nationwide. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance.

Citizens operates through its subsidiaries Citizens Bank, N.A. and Citizens Bank of Pennsylvania as Citizens Bank, Citizens Commercial Banking and Citizens One. Additional information about Citizens and its full line of products and services can be found at www.citizensbank.com.

Gibraltar Business Capital: Stan Scott has joined as a vice president, account executive, further filling out its team with another banking industry veteran. Scott joins the Gibraltar Business Capital lineup at a time

REGISTRATION IS OPEN FOR CFA’S ANNUAL CONVENTION IN CHICAGO! WWW.CFA.COM

when the privately held middle-market lender has been actively closing transactions, recently reaching nearly $50MM in funding for the first half of the year.

With more than 25 years of experience in the commercial credit arena, Scott will be managing a robust asset-based lending portfolio. Although his most recent experience was at MB Financial Bank, the bulk of his career was spent at First Capital, serving in a variety of risk-management roles.

Hilco Industrial, LLC: Mark A. Smith has joined the firm, focusing on the metals, mining and adjacent sectors. Smith is based in Northbrook IL, reporting to Tom Greco and Steve Wolf, co-CEOs of Hilco Industrial.

Smith joins Hilco Industrial from Houlihan Lokey, where he was global head of Metals and Mining. Prior to Houlihan Lokey, Smith was serving as managing director in the metals & mining practice at HSBC Securities in New York. He has also held senior executive roles at FTI Consulting, ABN AMRO/ Royal Bank of Scotland and GE Capital, among others.

Huntington Business Credit: Chad Seyfert was promoted to vice president and business development officer for asset-based lending. Seyfert will be covering Illinois and Indiana from the Chicago office in order to generate asset-based financings from $5 million to $50 million. Seyfert has 15 years of asset based experience including field exam, account management and underwriting and was most recently a senior underwriter at Huntington Business Credit.

Nations Equipment Finance, LLC (NEF): William Houng was appointed as vice president – sales. In this role, Houng will be responsible for originating equipment lease and loan transactions in NEF’s Western sales region. William comes to NEF with over eight years of experience in the equipment financing industry.

“I am very excited to join the NEF team.

NEF utilizes a unique capital structure to

provide clients with financing for a wide range of asset types and credit profiles, while also offering complete structuring flexibility (loans, leases, lines of credit) and custom payment options,” said William.

“With such an array of products and services, I am confident that my clients will be presented with the best possible financial solutions. I am looking forward to being an integral part of the NEF team and contributing to the organization’s long term success.”

“William’s demonstrated success and industry experience will contribute to our growth strategy and help increase new business originations in our western region,” said Ed Stolarski, executive vice president of Nations Equipment Finance.

Houng can be reached by phone at (909) 486-8520 or email WHoung@nationsequipmentfinance.com and will work out of NEF’s office in Brea, CA. PNC Bank, N.A.: James Paterson has joined PNC’s senior secured lending team in the Western region. Based in Los Angeles, Paterson joins as senior vice president and business development officer. He is responsible for business development with private equity firms and middle-market companies, originating asset-based and cash flow loans in southern California. Paterson joins PNC Business Credit from the CIT Group, where he served as a vice president and business development officer. Paterson earned an honors bachelor’s degree in business administration from the Ivey School of Business at The University of Western Ontario and an MBA with distinction in accounting and finance from the Ross School of Business at the University of Michigan.

Porter Capital Corporation: Kate Smith has joined the company as vice president of operations. Smith joins Porter Capital from Bibby Financial Services where she ran the Chicago Operations team and prior to that post the operations Team for Bibby International in Banbry, U.K. She has extensive experience in operations and risk, includ-

ing audit and relationship management.

Porter Capital is excited to welcome her to the team. With 20 years of experience, Smith will be an asset to the company and its clients.

Presidential Financial Corporation (PFC): Suzanne Lovett has joined its team as a business development officer in Dallas, TX. Lovett will focus her expertise on assetbased financing solutions with commitment amounts up to $30 million for businesses in Texas, Oklahoma and surrounding states.

Lovett brings significant experience to PFC, including commercial credit and business development in the asset-based lending space. Most of her career has been dedicated to asset-based loan origination in Texas and Oklahoma for Wells Fargo Capital Finance and predecessor companies such

as Wachovia Business Credit, Congress Financial, Norwest Business Credit, and Foothill Capital Corporation. Lovett earned a Bachelor of Business Administration degree with a concentration in finance from the University of Texas. She is an active member of the Turnaround Management Association, the Association for Corporate Growth and the Commercial Finance Association.

Rise Line Business Credit: Paul Durosko, Allan Gajadhar and Michael White have joined. The three new hires enhance the capabilities of the underwriting, credit, collateral management and analytical teams. Rise Line recently launched their lower middle-market asset-based lending platform for businesses looking for capital to fund their operations, acquisitions, and restructuring activities.

“We are very excited to announce the

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hiring of these three professionals to our team,” stated Daniel O’Rourke, chief executive officer of Rise Line. “Each brings a specific area of expertise as our Company continues its development and growth throughout 2017.”

Gaurang Vyas, founding and managing principal of Rise Line, added, “Paul’s breadth of experience and depth of knowledge across the ABL discipline and Allan’s experience and keen focus on loan operations will dramatically add to our underwriting and servicing competencies. Our team’s experience across multiple cycles and sectors adds to our ability to efficiently and effectively serve our clients.”

Paul Durosko joins as senior vice president, underwriting, and brings over 30 years of financial services and lending experience to Rise Line. For 25 years, Durosko worked in the commercial finance and lending industry in leadership positions. As a senior executive, he held management positions in areas of collateral examinations, portfolio management, underwriting as well as building and leading all credit aspects of several asset-based lending platforms.

Durosko has an extensive background in credit, having developed processes and procedures for numerous lending institutions which encompassed their underwriting and portfolio functions, while including both workout and regulatory compliance programs.

Before joining Rise Line, Durosko served as senior vice president of credit at Medallion Business Credit. Prior to Medallion, he was a director at Capflow Funding Group, where he was responsible for managing the firm’s equity positions while overseeing the surveillance of their factoring portfolio. In addition, Durosko served as Group Head of ABL at Transportation Alliance Bank (TAB Bank), where he established the Bank’s asset-based lending guidelines, including its policies and procedures. Before TAB Bank, Durosko was vice president of firm credit risk at Morgan Stanley, where he managed distressed loans. He developed his career by advancing in various senior

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level positions at Arthur Andersen, Fleet Capital, Transamerica Business Credit and Comerica Bank. Durosko received his Bachelor of Science at the University of New Haven with a major in accounting. He is also a member of both the Commercial Finance Association (CFA) and Turnaround Management Association (TMA).

Allan Gajadhar joins as vice president of operations, and brings over 15 years of financial services and operational experience to Rise Line. His career includes significant experience in the operational aspect of asset-based lending. He has served throughout his career in management roles overseeing daily collateral, banking and workouts.

Prior to joining Rise Line, he served as vice president of operations at Medallion Financial Corporation and prior to that served as vice president, client services of Medallion Business Credit (a division of Medallion Financial Corp). Before joining Medallion, he held a managerial position in the US wholesale market industry.

Gajadhar has an engineering degree from The University of the West Indies, Trinidad.

He is a member of the Commercial Finance Association (CFA).

Michael White joins as a financial analyst and is working as a part of the Rise Line deal team. His responsibilities include interfacing with prospective clients, analyzing financial statements and managing deal flow. White brings two years’ experience in structured finance and collateral analysis, and is currently completing coursework for the CFA’s Professional Education Programs.

White previously worked as a trade finance analyst for Noble Group, where he assisted in managing a $1 billion borrowing base facility and provided analysis on collateral and structured financing deals.

White graduated in 2014 from the University of Delaware with degrees in both accounting and finance.

SPECTRUM Commercial Services Company: John Klehm has been promoted to senior

REGISTRATION IS OPEN FOR CFA’S ANNUAL CONVENTION IN CHICAGO! WWW.CFA.COM

vice president. Klehm’s seven years of successful business development efforts have resulted in solid portfolio growth for SPECTRUM throughout his territory of Michigan, Ohio and Indiana. During his time with the company, SPECTRUM has become a valuable financing alternative for referral sources and prospects throughout the Great Lakes region.

Klehm is a long-time member of Detroit’s chapter of the Turnaround Management Association, where he has served on the board for the past six years chairing the chapter’s Newsletter Committee. His is also active in TMA’s West Michigan chapter and Michigan’s chapter of the Commercial Finance Association. Klehm can be contacted at: (248) 438-6782 and John.Klehm@ SpectrumCommercial.com.

SunTrust Robinson Humphrey (STRH) announced the addition of four industry veterans in investment banking and equity research. David Bain joins as a managing director and head of Technology & Services M&A. Scott Peterson joins as a managing director in software coverage. P.A. Weiner joins as a managing director in financial technology coverage and Terry Tillman joins as a managing director in software equity research.

Bain will lead STRH’s Technology & Services M&A team and is based in San Francisco. Prior to joining STRH, he served as co-head of Investment Banking and head of M&A at Pacific Crest Securities. Previously, he worked as an M&A banker at Sagent Advisors, Wachovia Securities, Dresdner Kleinwort Wasserstein and Lehman Brothers.

Peterson will join STRH banker Bob Casey to expand STRH’s software practice.

Prior to joining STRH, he led the software investment banking practice at BMO Capital Markets. Previously, he worked as a technology investment banker at J.P. Morgan and Credit Suisse First Boston. Peterson is based in San Francisco.

Weiner will join STRH bankers Mike Maguire and Jamie Hamilton to expand the financial technology practice. Prior to

joining STRH, he led the financial technology investment banking practice for Signal Hill. Previously, he worked as a technology investment banker at RBC Capital Markets, Deutsche Bank and Alex. Brown & Sons Incorporated. Weiner is based in New York.

Tillman will lead software equity research for STRH and brings 19 years of equity research experience, including four years previously with STRH. Prior to re-joining STRH, Terry spent nine years at Raymond James covering the software sector. Previously, he worked in the research departments of SoundView Technology Group and Banc of America. Tillman is based in Atlanta.

TAB Bank: Chris Mitchell has joined the business development team as vice president and business development officer.

Mitchell will be based in Atlanta and will be responsible for sourcing new business opportunities by providing asset-based and factoring working capital facilities to commercial entities in the Southeastern United States with annual revenues of $2 million to $150 million. Mitchell has over 25 years of experience in the asset-based lending and factoring industries. The majority of Mitchell’s career has been providing small to mid-size companies with asset-based loans, accounts receivable financing, factoring, and equipment funding solutions to support their working capital needs. Recently, Mitchell’s experience includes positions at Hitachi Business Finance, Greenfield Financial, and other boutique finance companies. Earlier in his career, he started First Capital Corporation’s Atlanta office as vice president/region manager where he was responsible for new loan origination for assetbased lending and factoring transactions for small to mid-size companies throughout the Southeast. Mitchell earned a Bachelor of Science degree in finance from Auburn University. He can be contacted at: (404) 4327657 or chris.mitchell@tabbank.com.

U.S. Bank: Betsy Cadwallader joined as its Seattle market president. Cadwallader will lead the market in company-wide efforts

and activities and will direct commercial banking in the greater Seattle area.

Cadwallader will succeed Mike Katz who has served as market president since 2015.

Katz is relocating out of the market and will remain with U.S. Bank.

Cadwallader has more than 30 years of commercial, corporate and investment banking experience. She joined U.S. Bank in 2012 and most recently held the position of chief credit officer, Commercial Banking.

Previous to this she served in the role of commercial banking relationship manager team lead, focused on providing solutions to middle-market, mid-cap and not-for-profit organizations in the greater Chicago area.

Before joining U.S. Bank, Cadwallader held numerous business line and senior executive positions at institutions including: JP Morgan Chase, Bank of America, Bank One and Constellation Energy.

Wells Fargo & Company: Becky Gibson, a 27-year banking veteran, will lead its Iowa Middle Market Banking team as regional vice president, effective immediately. Iowa is one of Wells Fargo’s most-established markets, growing revenues more than 30 percent from 2012 to present.

Gibson succeeds Grant Friesth, recently promoted after eight years in the Iowa post to lead the commercial bank’s Central Division, including Iowa, Nebraska, North Dakota, and South Dakota Middle Market Banking teams.

Gibson reports to Friesth and oversees eight experienced commercial lending professionals, who deliver Wells Fargo’s localized approach to serving privately held, middle-market companies with revenues of $20 million and above. The bank’s Middle Market Banking hub in Des Moines provides more than 80 Wholesale Banking services to customers in industries such as agriculture, manufacturing, wholesale, retail, distribution, and technology.

Middle-market companies drive the economy in the Central U.S. and nationally, reporting average revenue growth of 6.9 percent in the fourth quarter and a strong year of overall growth in 2016 according to

the National Center for the Middle Market.

“We’re pleased to elevate another highcaliber Wells Fargo veteran in Iowa, who will continue to guide our local middle-market banking team with integrity, diligence, and commitment to helping companies succeed financially,” Friesth said, pointing out that Wells Fargo continues to add new bankers and support staff to support customer demand. “With nearly three decades of experience under her belt, Becky is well-versed in the financial needs of our Iowa customers.”

Previously serving as a senior vice president and senior commercial relationship manager, Gibson spent a majority of her career directly serving customers. She joined Wells Fargo in 2006, after spending 16 years with Bank of America and its predecessors.

Wells Fargo Middle Market Banking: Denette Suddeth was appointed to lead its continued growth in Nevada. Suddeth succeeds former regional manager Phil Horrell, who was promoted to market executive, a new role focused on commercial initiatives that foster new business opportunities in the Southwest.

As senior vice president and regional manager, Suddeth now oversees 18 Nevada commercial lending professionals in Reno and Las Vegas who deliver Wells Fargo’s localized approach to serving middle-market companies with annual revenues of $20 million and above. The regional offices provide Wholesale Banking services to customers in a range of industries, including gaming, manufacturers, retail, distribution, and technology.

Prior to Suddeth’s promotion, she served five years as loan team leader for Wells Fargo Middle Market Banking in Las Vegas.

Suddeth joined Wells Fargo in 2012 after many years with U.S. Bank, where she held leadership roles in relationship development, gaming industry services, and middle market banking.

Suddeth earned her bachelor’s degree in managerial finance from University of Nevada, Las Vegas. She also attended the Northwest Intermediate Commercial Lend-

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ing School in Portland, OR, and the Pacific Coast Banking School in Seattle. An active member of her community, Suddeth serves as vice chair for the United Way of Southern Nevada. She also acted as chairman of the board for the Junior Achievement of Southern Nevada, and as council member for the Nevada Department of Education advisory council on Family Engagement.

White Oak Commercial Finance, LLC (WOCF or White Oak) an affiliate of White Oak Global Advisors, LLC and its institutional clients, announced the appointment of Gino Clark to managing director of originations.

Clark is responsible for managing WOCF’s West Coast Office and portfolio of factoring and ABL relationships. Previously, Clark served as executive vice president, portfolio manager.

“Gino is a valuable member of White Oak in originating and managing credit

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facilities for our West Coast clients,” said Robert Grbic, president and chief executive officer, WOCF. “He plays a large role in the company’s growth, as we expand our product offerings and size of financial facilities available.”

Prior to joining WOCF, Clark held multiple roles in underwriting and relationship management in the ABL and factoring departments at Heller Financial, Inc., Finova Capital Corp., SunTrust Bank, Inc. and GMAC Commercial Credit, LLC. “White Oak has grown significantly since I joined the organization almost 15 years ago. This is a testament to its experienced management team, unique platform and ability to provide quick access to flexible financing. I look forward to continuing this vision while contributing to the organization’s future success,” said Clark.

Clark received an M.B.A. from Pepperdine University and a B.S. in business adminis-

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CHAPTER SPOTLIGHT

the cfa brief

CFA’S MIDWEST CHAPTER ACHIEVES A MEMBERSHIP MILESTONE The CFA Midwest Chapter is proud to announce it reached a membership milestone goal of 300 members for 2017. Below, CFA Midwest Membership Committee Co-Chair, Shari L. Lipski CLFP, Principal at ECS Financial Services, Inc., and Chapter members discuss the growth of the Chapter and the reward of being involved.

“The Midwest Chapter has seen significant growth in recent years, largely attributable to the Chapter’s volunteer leaders, committee members, and sponsoring organizations,” said Eric Welchko, Midwest Chapter President. “In conjunction with the growth in membership in recent years, we have expanded our event schedule to include new and exciting events for our members. Driven by the dedication of our leaders and committee members, our Chapter is improving every year as we continue to serve a larger community of professionals. I commend the Membership Committee as being a sterling example of committed chapter volunteers and am grateful to Jonathan Deptula, Hyperams; Sue Duckett, Franklin Capital Network; Jay Henry, Liquidity Services; Shari Lipski, ECS Financial Services, Inc.; Chris Marquez, Goldberg Kohn; Terrence McKenna, BMO Harris Bank; and Alex Mazer, Big Shoulders Capital for their hard work and dedication to reach our goal.”

CFA Midwest’s goal is to provide the best networking forum for lenders and service providers. Its membership is comprised of professionals with great

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insight and experience that take pride in sharing their quality programs, valued contacts, and more with others. There’s been a significant upward trend in the Chapter since 2011 when it had 90 members and hosted five annual events. Today, the Chapter has more than 300 members and 10 committees with almost 60 members volunteering. This year will mark a record year of 21 events for members to take part in including four YoPro and four WICF specific events, education programs, golf outing, a Chicago Blackhawks game, watching the World Champion Chicago Cubs, and a road trip to see the Milwaukee Brewers.

“We’ve been involved in the CFA for at least three years,” said Membership Committee member Alex Mazer of Big Shoulders Capital. “We attend the CFA annual conference and have been active at various local events. This is the first year I joined a committee and I really enjoyed participating with other colleagues who are incredibly committed to further developing the Midwest Chapter.”

“In addition to a great group of volunteers, we are also very thankful to our sponsors that help us make our chapter strong,” said CFA Midwest Membership Committee Co-Chair, Shari L. Lipski, ECS Financial Services, Inc. “Annual sponsorship has increased from five companies to a staggering 36 and sponsor dollars have increased a whopping 300% during the last six years.”

“I’ve been affiliated with the CFA for over 15 ½ years during my tenure at Liquidity Services,” said Jay Henry, CFA Midwest Membership Committee Co-Chair. “The CFA offers tremendous networking opportunities that are not matched by any other association in the finance industry. The Membership Committee provides volunteers the opportunity to re-connect with

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old friends and discover new contacts while enjoying educational forums to promote and educate our members on germane topics in the industry.”

As co-chair of the Membership Committee, Lipski is proud to say that seven women have served as president of the Chapter over the years.

“I think that is a great testament to our Chapter’s growth and diversity, showing our ever-expanding focus on member’s interests,” she added.

“All of us here at CFA Midwest are looking forward to this year’s annual convention in November which will be held right here in hometown Chicago,” Lipski continued. “The YoPro and WICF Committees are each hard at work planning events to showcase our members, our great city, and provide a fun-filled networking opportunity to show everyone how we’ve grown, our member pride, professional interests, along with our true Midwestern spirit.” *Editor’s note: If your Chapter has an interesting story or milestone to share, or photos and news from Chapter events, we welcome them! Please send your news to Eileen Wubbe, senior editor, The Secured Lender, ewubbe@cfa.com

CHAPTER NEWS Atlanta The Chapter held its YoPro! Third Annual Entrepreneur’s Night event on September 7 at Gordon Biersch in Atlanta.

This year, Kathryn Petralia, co-founder of Kabbage, who spent her prior 15 years working with large and small companies focused on credit, payments and e-commerce was a speaker.

Prior to co-founding Kabbage, Petralia launched a number of different successful technology startups. Kabbage is a comprehensive small-business lending platform which allows for customized configurations, allowing companies to use data to quickly underwrite and monitor millions of customers. With the Chapter’s entrepreneurship series, CFA YoPro! brings access to an entrepreneur turning her passion into a business and an open forum to ask questions and discuss what’s on the mind of young finance professionals.

On October 3, the Chapter held an outing to watch Atlanta United FC vs.

Minnesota United FC at the new Mercedes-Benz Stadium in Atlanta, home to one of the most exciting teams in Major League Soccer – Atlanta United FC. A portion of event proceeds were donated to CURE Childhood Cancer - (www.childhoodcancer.org) on behalf of the CFA. The Chapter will hold an Educational Breakfast at the offices of McGuireWoods on October 19. The Chapter’s Holiday Party with TMA will be held on December 7.

For more information visit community.cfa.com/atlantachapter.

California The Chapter held “Retail Roundtable: Lessons Learned and the Changing Landscape” panel discussion at the Luxe Summit Hotel on October 4. The

panel consisted of industry experts with turnaround, legal and liquidation experience across multiple retail sectors, addressing both the positive and negative effects of the current retail environment, and lessons learned from the past. Topics included: Where does it go from here? Who benefits from downsizing brick & mortar and who doesn`t?

Amazon, Walmart, who else? Is bigger better? Specialized retail, smaller stores, must have stores, on-line or both? What happens to retail-related real estate?

Does liquidation strategy change in the future?

Speakers included: Glenn Bandy, chief appraiser, Jay Cobb & Marley; George P. Blanco, managing principal, EMA Group | Enterprise Management Advisors, LLC; Lawrence F. Flick II, partner and chair of Blank Rome’s Financial Services Industry Team, Blank Rome LLP; Becky Goldfarb, managing director, head of Retail and Internet Valuations Gordon Brothers; Jeff Nerland, senior director; Sierra Constellation Partners LLC and Jeffrey E. Brandlin CPA, CFF / CIRA, CM&AA, Brandlin & Associates as moderator.

On October 17, the Chapter will hold a golf outing at Coyote Hills Golf Course in Fullerton, CA. The event includes a $25,000 Hole-in-One Contest, a BBQ lunch and on-course beverages, cocktail reception, hors d’oeuvres and a Nike golf shirt with the Coyote Hills Golf Course logo.

On October 19, the Chapter’s YoPro will hold an Oktoberfest event at The Standard Biergarten. The rooftop biergarten offered panoramic views of downtown Los Angeles and traditional Bavarian beer.

The Chapter will be holding a Sponsor Panel on November 15 at the Center Club-Orange County and a holiday party at the Sheraton Universal hotel on December 13.

For more information visit community.cfa.com/californiachapter.

Charlotte The Chapter held Economic Incentives You and Your Clients May Be Missing panel and luncheon on September 26 at The Palm Restaurant in Charlotte. The panel was presented by Patric Zimmer, president of Development Advisors. Development Advisors was founded in 1996 to provide confidential site selection, incentive negotiation, and real estate advisory services to both privately held and publicly traded companies across all industry sectors. Zimmer has a successful 20-year background in location consulting and real estate development.

For more information, visit http://community.cfa.com/charlottechapter/home.

Europe The Chapter held a two-panel thought leadership event commencing with a networking lunch on October 4 at NautaDutilh in Amsterdam, The Netherlands.

Jeremy Harrison, regional group head/ SVP/Sr. BDO of Bank of America and president of the CFA Europe Chapter, provided the welcome. There was a Legal Panel, “Critical Changes to Belgian Secured Transaction Law & The Broader European Impact” focusing on changes to Belgian law for secured transactions come into effect on January 1, 2018. The panel discussed the practical aspects of these changes, the legal impact on ABL deals and the possible harmonization of these changes across Europe. The panelists included Markus Schmucker, partner, Squire Patton Boggs – Berlin and Thibaut Willems, partner, NautaDutilh – Brussels. Teun Struycken, partner, NautaDutilh NV – Amsterdam, served as moderator.

The second panel was the ABL Markets Panel: The Future of the European ABL Market. With extensive market expertise from Germany, the Netherlands and Belgium, the panel debated the challenges, opportunities and successes they have experienced with recent ABL

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the cfa brief

deals. Panelists included: Arjan de Liefde, managing director international clients, ABN AMRO Commercial Finance, and Erik Fontein, principal, Nielen Schuman.

Mike Roth, director/head of Asset Based Finance Midcap, Deutsche Bank AG, served as moderator. The event concluded with an informal networking event.

For more information visit community.cfa.com/cfaeurope.

Florida On September 13, CFA Florida-Orlando held a panel, “The Need for DoddFrank Relief and the State of Banking 2017” at the Citrus Club in Orlando, FL. Alex Sanchez, president of the Florida Bankers Association was the presenter. On September 27 the Chapter held its monthly Tampa CFA September Luncheon at The Center Club in Tampa. Bill Risser, VP, digital strategy at Fidelity National Title was the speaker. The panel discussed how to capture, organize and share notes from anywhere to keep those ideas in sync, organization at work and decluttering and how to work smarter and enhance your notes with links, checklists, tables, attachments and audio. The Annual Fall CFA - TMA Networking Reception will be held October 19 at Ouzo Bay, Mizner Park, Boca Raton.

For more information visit community.cfa.com/floridachapter.

Houston The Chapter held a Panel Luncheon, “The Annual State of the Private Equity Markets” at Vic & Anthony’s in Houston on September 13. The Luncheon included a charity drive to collect supplies and donations for Hurricane Harvey recovery efforts. Panelists included Josh Tabin, consulting CFO, Francis Carr, managing director, Milton Street Capital; Ian H. Fay, senior partner, Entoro Capital , LLC; Peter Hans, CEO/co-founder, Harvest Exchange; Preston Massey, co-founder/

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managing member, Congruent Investment Partners, LLC, and James Taylor; managing director/CEO, MNA Advisor, LLC. The Chapter held a Lunch and Learn at the offices of Whitley Penn on September 21 discussing Energy Trends in Private Equity. Panelists included Matthew Kondratowicz, managing director, CSL Capital Management; Preston Powell, principal, Carnelian Energy Capital, and Jason M. Tracton, director, Sage Road Capital. The event was was free to Chapter members.

On September 28 the Chapter held a YoPro! Happy Hour at Benjy’s in Upper Washington.

Save the date for a Lunch and Learn hosted by Weinstein Spira on November 2 (topic to be announced).

For more information visit community.cfa.com/houstonchapter.

Michigan The Chapter held its 2nd Annual Brew Social at Roak Brewing Co. in Royal Oak, MI on October 3.

For more information visit community.cfa.com/michiganchapter.

MidSouth The Chapter hosted its Sporting Clays event at the Nashville Gun Club in Nashville on September 26 with ACG-Tennessee. Dinner followed at Maggianos.

For more information visit community.cfa.com/midsouthchapter.

MidWest The Chapter held “The Radio Flyer Story: Transforming & Innovating While Retaining Your Roots” Educational Event on October 4. In this program, Tom Schlegel, senior vice president of product development, and Amy Bastuga, senior vice president of human resources, told the story of how Radio Flyer has transformed its people and its products to create an award-winning workplace that

REGISTRATION IS OPEN FOR CFA’S ANNUAL CONVENTION IN CHICAGO! WWW.CFA.COM

is driving innovation in this 100-year-old company to its best year ever. Attendees learned how Radio Flyer keeps in touch with its history without getting left behind in the marketplace, and how they continuously bring innovative products to market. Lenders gained an inside perspective on how companies strategically react to outside forces to maintain and enhance their brand. In the eyes of lenders and other stakeholders, a strong brand is one of many critical assets which drive positive financial performance and support credit or investment decisions.

On October 9 or 10 (ticket holders will be notified of the exact date and time once the schedule is finalized) the Chapter will hold its Cubs Postseason NLDS Playoff Game event at the Wrigley Rooftop Deck in Chicago. The Pre-game Networking Party will start one hour before game time. Save the date for the Chapter’s Sporting Clays outing on November 16 at the Northbrook Sports Club in Northbrook, IL. For more information, visit community.cfa.com/midwestchapter.

Minnesota The Chapter held a Lunch and Learn, “Working with Unique Collateral,” on September 22 at Gray Plant Mooty law offices in Minneapolis, MN. Presenters included Adam Nathe, principal, APC-Recruiting Chair at Gray Plant Mooty, who concentrates his practice in commercial lending and Dave Morehouse, principal, focusing on private finance and commercial law, mergers and acquisitions, general corporate law, and international business transactions.

For more information, visit community.cfa.com/minnesotachapter.

New Jersey On October 3 the Chapter held a members-only event at Son Cubano Restaurant & Bar in the La Vista Room in

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West New York. On October 12 the Chapter will host a YoPro Financial Planning Seminar - A Real Life Road Map for Your Future, at the offices of Mandelbaum Salsburg in Roseland, NJ. The Chapter will also hold “Technology and the Future of Commercial Finance Professionals,” a joint event with the New Jersey TMA on November 1 at the Tournament Players Club at Jasna Polana in Princeton, NJ. The event will also feature a buffet dinner. Save the date for the Chapter’s holiday party, held at the Highlawn Pavilion in West Orange, NJ on November 30.

For more information, visit community.cfa.com/newjerseychapter.

New York The Chapter held its Rooftop Networking Event & Whiskey Tasting on September 19 at The Perfect Pint (EAST) in New York.

For more information, visit community.cfa.com/newyorkchapter.

Philadelphia The Chapter will hold an October Educational Event on October 12 at Drexel University in Philadelphia, PA, which will include Ryo Tashiro from the Federal Reserve Bank of Philadelphia, who will lead a discussion focused on the economic outlook during these uncertain times.

Prior to Tashiro, a Student Panel Session, geared toward students of Drexel’s LeBow College of Business, showcasing the various types of commercial lenders will be led by CFA members who are Drexel alumni. CFA Members and Non-Members are welcomed to attend both the Panel Session and Discussion.

The panel includes: Fred Raccosta, Tiger Group, moderator; Bob Clark, Interface Financial, (factor); John Gianguilio, Context Business Lending (asset-based lender); Steve Raymond, The DAK Group (investment banker) and Norm Smith, Beneficial (middle-market lender).

Save the date for the Chapter’s Annual

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Joint Holiday Networking Event on December 7 at the Loews Philadelphia Hotel in Philadelphia, PA. The networking gathering will also be held with the Philadelphia Chapter of the Turnaround Management Association and the Bankruptcy Committee of the Philadelphia Bar Association. Attendees will enjoy spectacular views of Philadelphia, 33 floors above the hustle & bustle of the busy streets below.

For more information, visit community.cfa.com/philadelphiachapter.

of the attendees will be: select private equity/junior capital fund managers; regional investment bankers; sponsors and invited guests and other professional deal intermediaries.

For more information, visit www. cfasw.org.

For more information on CFA Chapters, please visit community.cfa.com/ch/ chaptersmain

Southwest The Chapter’s Sixth Annual Energy Summit was held at the Belo Mansion on September 12. The Keynote Speaker was Texas Lt. Governor Dan Patrick. The Chapter will hold PEGapalooza 2017, Dealmaker Wine & Whiskey Tasting on November 15 at 015 at Trinity Groves in Dallas, TX. Join 300-plus deal professionals from around the country for an evening of power networking over wine, whiskey and heavy apps. Attendees of PEGapalooza will include deal professionals, intermediaries and private equity investors serving the merger and acquisition community. The composition

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CALENDAR

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October 9, 2017 CFA’s Midwest Cubs Postseason NLDS Playoff Game Wrigley Rooftop Deck Chicago, IL October 12, 2017 CFA’s Philadelphia Chapter – Educational Event Drexel University Philadelphia, PA October 12, 2017 CFA’s New Jersey Chapter YoPro Financial Planning Seminar A Real Life Road Map for Your Future The Offices of Mandelbaum Salsburg Roseland, NJ October 17, 2017 CFA’s California Chapter – Annual Fall Golf Classic Coyote Hills Golf Course Fullerton, CA October 19, 2017 CFA’s Atlanta Chapter – Educational Breakfast Event McGuireWoods Atlanta, GA October 19, 2017 CFA’s California Chapter – YoPro Oktoberfest The Standard Biergarten Los Angeles October 19, 2017 CFA’s Florida Chapter – Annual Fall CFA TMA Networking Reception Ouzo Bay, Mizner Park Boca Raton, FL, US

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October 25, 2017 CFA’s Minnesota Chapter – Capital Markets and Divestitures: Understanding the Options, Realizing the Impact IDS Center Minneapolis, MN November 1, 2017 Technology and the Future of Commercial Finance Professionals – Joint with NJTMA Tournament Players Club at Jasna Polana Princeton, NJ November 2, 2017 CFA’s Houston Chapter – Weinstein Spira Lunch & Learn Weinstein Spira Location TBD November 8 – 10, 2017 CFA’s 73rd Annual Convention Sheraton Chicago Hotel & Towers Chicago, IL November 10, 2017 CFA’s Minnesota Chapter – Lunch and Learn Exact location TBD November 15, 2017 Sponsor Panel Center Club – Orange County Costa Mesa, CA November 15, 2017 CFA’s Southwest Chapter – PEGapalooza 2017 Dealmaker Wine & Whiskey Tasting 3015 at Trinity Groves Dallas, TX November 16, 2017 CFA’s Midwest Chapter – Sporting Clays Outing Northbrook Sports Club Northbrook, IL

REGISTRATION IS OPEN FOR CFA’S ANNUAL CONVENTION IN CHICAGO! WWW.CFA.COM

November 30, 2017 CFA’s New Jersey Holiday Party Highlawn Pavilion, Eagle Rock Reservation, West Orange, NJ November 30, 2017 CFA’s Midwest Annual Holiday Party Boleo Chicago, IL December 6, 2017 CFA’s Minnesota Chapter – Holiday Social and Member Drive Town and Country Club St. Paul, MN December 7, 2017 CFA’s The Future of FinTech 2017 Jones Day New York, NY December 7, 2017 CFA-TMA Philadelphia Annual Joint Holiday Networking Event Loews Philadelphia Hotel Philadelphia, PA December 7, 2017 CFA’s Atlanta Chapter Holiday party with TMA Location TBD December 12, 2017 CFA’s Europe Chapter – Winter Networking Party The Aon Centre, The Leadenhall Building London December 13, 2017 CFA’s California Chapter – Holiday Party Sheraton Universal Universal City, CA

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