TSL November 2024

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ACCELERATING GROWTH:

Shaping our Future

As we begin to look back on 2024 and ahead to 2025, our focus shifts to “Accelerating Growth” - the theme of SFNet’s 80th Annual Convention. As the thought leader and convener of the secured finance industry, we are committed to accelerating business and economic growth while helping our members reach their potential. Throughout our storied history, your association has played a crucial role in bringing together the resources that put capital to work to shape a more beneficial future.

SFNet’s unwavering commitment to our mission and goals has helped position the industry for an exciting 2025 and beyond. The dedication, hard work, and support of the SFNet community, volunteers, and team have been key to our success in the past year. By leveraging our collective expertise and fostering strong partnerships, we’re creating a robust ecosystem that fuels innovation and drives growth for years to come.

Here are just a few of the highlights of 2024. Many thanks to the dedicated volunteers who helped make this possible. Be sure to read our quarterly membership updates and our Annual Report to Members for continued updates.

In the dynamic world of secured finance, maintaining an edge is paramount. To meet the evolving needs of the SFNet community, SFNet announced, in June, an innovative and comprehensive professional certification program which promises to set a standard for our industry. The Secured Finance Network’s Certified Secured Finance Professional (CSFP) Program is designed to equip individuals with the knowledge and skills, necessary to excel in asset-based lending and factoring. For details on the program visit www.sfnet.com or reach out to Denise Castagna at dcastagna@sfnet.com.

On the advocacy front SFNet published a compliance guide to assist members in navigating the commercial finance disclosure laws in Georgia and Florida and continues to fight for our members at the state level. After months of meeting with members and representatives of the Federal Reserve, OCC and FDIC, SFNet issued its Comment Letter with specific recommendations in opposition to the Basel III endgame proposal. The rule as proposed would have imposed unnecessary capital charges that would adversely impact lenders and borrowers throughout our ecosystem. We remain actively engaged in shaping this rulemaking.

Early this year, SFNet launched the IMPACT Awards, celebrating excellence in the secured finance industry. IMPACT winners embody the core values and achievements that the SFNet community strives to uphold and promote: Innovation, Market Leadership, Performance, Achievement, Customer Focus and Teamwork. Turn to page 44 to be inspired by the winners’ stories.

A major development in 2019, was the creation of the SFNet Hall

of Fame. In this issue of TSL, we honor the SFNet 2024 Hall of Fame inductees on page 35. Through their vision, determination and dedication, they’ve had a profound effect on generations of professionals, shaping our industry and association.

On page 11, in Eyes on The Future: SFNet Welcomes its Youngest President, Robert Meyers of Republic Business Credit, discusses his goals as SFNet’s new president, which include creating a larger and more inclusive community to benefit its members and accelerate access to those in need of capital.

The Secured Finance Network’s 20 Chapters are comprised of professionals with great insight and experience. From golf outings to educational events, several Chapters share their highlights from the past year in Celebrating the Achievements of SFNet Chapters on page 26.

Secured lenders increasingly rely on appraisers for swift and accurate valuations amid rising complexities in asset-based lending. With business bankruptcies up 40% and ongoing supply chain challenges, appraisers must adapt quickly to maintain their vital role in the underwriting process, ensuring lenders receive the critical insights needed to navigate this evolving landscape. Don’t miss Appraisers See a Mixed Picture for Valuations on page 16.

On page 66, Jeff Wurst of Armstrong Teasdale explores the critical role of arbitration in commercial lending, offering lenders a strategic approach to mitigate litigation risks and maintain confidentiality. Discover how effective arbitration clauses can safeguard your interests and streamline dispute resolution.

In Dancing Around Workouts: Is it Time for the Article 9 Two Step? on page 74, Hilco Streambank’s Richelle Kalnit explores a transformative approach to restructuring retail and consumer brands facing bankruptcy.

As we near the end of the “Year of Elections,” nearly half the world’s population is witnessing significant political shifts that could reshape global economies. On page 78, David Chmiel explores the unexpected election outcomes in Europe and the broader economic landscape.

In the dynamic world of finance, credit insurance has evolved from a mere safety net to a vital strategic tool for lenders. Discover how innovations in technology and data analytics are reshaping risk management, enabling financial institutions to enhance lending capabilities, reduce defaults, and foster economic growth in an increasingly complex market on page 82 in Innovations in Credit Insurance: A New Era for Financial Institutions

I look forward to seeing many of you during the Convention in Houston and working together for a successful 2025!

AN INTERVIEW WITH SFNET’S PRESIDENT, ROBERT MEYERS P11 TABLE OF CONTENTS. NOVEMBER 2024 VOL. 80 ISSUE 6

COVER STORY

Eyes on The Future: SFNet Welcomes its Youngest President in 80 Years

Robert Meyers, managing member and president of Republic Business Credit, discusses his over 10 years of SFNet involvement to where he is today, as well as his goals as SFNet’s incoming president, which include creating a larger and more inclusive community to benefit its members and accelerate access to those in need of capital. 11

FEATURE STORIES

Appraisers See a Mixed Picture for Valuations

Secured lenders increasingly rely on appraisers for swift and accurate valuations amid rising complexities in asset-based lending. With business bankruptcies up 40% and ongoing supply chain challenges, appraisers must adapt quickly to maintain their vital role in the underwriting process, ensuring lenders receive the critical insights needed to navigate this evolving landscape. 16

FEATURED STORY

CELEBRATING THE ACHIEVEMENTS OF SFNET CHAPTERS P.26

Part 2: Taking Security in Cross-Border Lending:

(How Do You Know) the Steps to Take or Whose Law Is It Anyway?

David Morse of Otterbourg P.C. explores the key relevant rights of the Secured Lender and “Third-Party Effectiveness”, what happens if the obligor on the receivable is located outside of the United States?, Rome I Regulation and more. Part 1 of this article appeared in the September/October issue of The Secured Lender 20 BY

Celebrating the Achievements of SFNet Chapters

The Secured Finance Network’s 20 Chapters are comprised of professionals with great insight and experience. From golf outings to educational events, several Chapters shared their highlights from the past year. 26 BY EILEEN WUBBE

SFNet Foundation

Contributors 30

SFNET AWARDS

SFNet Hall of Fame Inductees

Profiles of SFNet’s 2024 Hall of Fame Inductees, including their career highlights and contributions to the industry. 35

SFNet IMPACT Awards

IMPACT Award recipients embody the core values and achievements that the SFNet community strives to uphold and promote. 44

CONVENTION INFORMATION

SFNet’s 80th Annual Convention Exhibitor Guide

Showcases the exhibitors at SFNet’s Annual Convention. 58

Articles

LITIGATION RISKS INSIGHTS

Something Commercial Lenders Can Learn From Consumer Lenders

Jeff Wurst of Armstrong Teasdale explores the critical role of arbitration in commercial lending, offering lenders a strategic approach to mitigate litigation risks and maintain

confidentiality. Discover how effective arbitration clauses can safeguard your interests and streamline dispute resolution. 66

WORKOUT TRENDS Guide to Managing Accounts Receivable Financing Workouts

Joseph Heim of Culain Capital outlines how secured finance professionals can navigate the complexities of workouts when providing accounts receivable financing facilities. 68

COLLATERAL TRENDS

Intercreditor Agreements In Skilled Nursing Facilities

Intercreditor agreements in skilled nursing facilities (SNFs) present unique challenges due to the interplay of regulatory constraints and complex collateral allocations. Attorneys from Holland & Knight explore the intricacies of these agreements, highlighting the distinct features that arise in financing transactions within this highly regulated healthcare sector. 71

ELLE G.

ESQ., AND ABBEY M. RUBY

BANKRUPTCY TRENDS

Dancing Around Workouts: Is it Time for the Article 9 Two Step?

Hilco Streambank’s Richelle Kalnit explores a transformative approach to restructuring retail and consumer brands facing bankruptcy. 74

The Secured Finance Network 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 6 times per year (Jan/Feb, March, June, July/August, September/October and November) $65 per year non-member rate, and $105 for two years non-member rate. SFNet members are complimentary.

Secured Finance Network

370 Seventh Avenue, Suite 1801, New York, NY 10001. (212) 792 -9390 Email: tsl@sfnet.com www.SFNet.com

Periodicals postage paid at New York, NY, and at additional mailing offices. Postmaster, send address changes to The Secured Lender, c/o Secured Finance Network, 370 Seventh Avenue, Suite 1801, New York, NY 10001

Editorial Staff

Michele Ocejo

Editor-in-Chief and SFNet Communications Director mocejo@sfnet.com

Eileen Wubbe Senior Editor ewubbe@sfnet.com

Aydan Savaser Art Director asavaser@sfnet.com

Advertising Contact: James Kravitz

Business Development Director T: 646-839-6080 jkravitz@sfnet.com

ELECTION TRENDS Reflections (So Far) on the Year of Elections – Part One

As we near the end of the “Year of Elections,” nearly half the world’s population is witnessing significant political shifts that could reshape global economies. David Chmiel explores the unexpected election outcomes in Europe, their implications for public policy, and the broader economic landscape, revealing a complex interplay of uncertainty and opportunity. Part Two of this article will appear in the Jan/Feb 2025 issue. 78

CREDIT TRENDS

Innovations in Credit Insurance: A New Era for Financial Institutions

In the dynamic world of finance, credit insurance has evolved from a mere safety net to a vital strategic tool for lenders. Discover how innovations in technology and data analytics are reshaping risk management, enabling financial institutions to enhance lending capabilities, reduce defaults, and foster economic growth in an increasingly complex market. 82

CROSS-BORDER FINANCE ESSAY

Valuation vs. Reality: Exploring How Net Orderly Liquidation Value (“NOLV”)

Is Impacted by Borrower Corporate Structure

Earlier this year, SFNet announced its third Cross-Border Finance Essay Contest, sponsored by Goldberg Kohn Ltd. This essay won first place. The second and third place essays will be published in the Jan/Feb 2025 issue. The authors of the winning essays have been invited to participate on a panel at SFNet’s 80th Annual Convention in Houston, TX, November 13-15. 85

SFNet Committee Spotlight: Marketing Committee

This column highlights the hard work and dedication of SFNet’s Committee volunteers. Here we speak with Lauren Nadeau, senior director, head of Marketing & Communications at Gordon Brothers and chair of SFNet’s Marketing Committee. 88

BY EILEEN WUBBE

BEYOND SECURED FINANCE Faces of Freedom

Walter Schuppe, formerly of Pacific Western Bank, started Faces of Freedom in 2019 to express gratitude to and honor the sacrifices and service of U.S. Military veterans and their families. 91

SFNET MEMBER PROFILE

Bob Zadek’s Homecoming: A Celebrated Journey Through Secured Finance

Many in the secured finance industry know or have worked with Bob Zadek over the years, whether at an SFNet Convention or having read at one time his column, You Be the Judge, that ran in The Secured Lender 94

SFNET MEMBER PROFILE

Tauber-Arons:

Four Generations of Leadership and Innovation in Auctions

Tauber-Arons Auctioneers is the oldest and longest-running auctioneer in the industry. Owned by four generations, the firm recently re-joined SFNet and plans to continue its legacy. 96

SFNET MEMBER PROFILE

Bridgeport Capital: 25 Years of Empowering Businesses to Reach Their Full Potential

Demonstrating a solid track record of helping businesses get the funding they need, Bridgeport Capital celebrates its 25th anniversary this year. 98

WUBBE

Departments

TOUCHING BASE 1

NETWORK NOTES 6

In Memoriam: David Crumbaugh

SFNet is saddened to inform you of the passing of David Crumbaugh. David was an active member of SFNet and will be greatly missed. David Gordon Crumbaugh of Boca Grande, Florida passed away on August 15, 2024, in Coloma, MI surrounded by family. He was a brother, husband, father, grandfather, attorney, and mentor. He was 72 years old. A Celebration of Life Reception was held on October 26 at Oak Park Country Club, 2001 N Thatcher Ave, River Grove, IL 60171.

David was born in Le Roy, IL on October 1,1951 to Wendell and Joreece Crumbaugh. After graduating from Le Roy High School in 1969, he attended Illinois State University where he received his Bachelor of Science in political science in 1973. He received his Juris Doctorate from the University of Illinois in 1976 and began his law career at Winston & Strawn before joining Latham & Watkins, where he retired in 2017. He was acknowledged by his peers as an outstanding attorney in creditor, banking, and finance law. After retiring, he continued his passion for Abraham Lincoln and Civil War history. He loved Lake Michigan, and said his best days were having a morning cup of coffee in Chicago and an evening glass of wine in Michigan.

He was generous with his time and resources, participating in community, education, and professional organizations including:

Illinois State University where David was inducted into the College of Arts and Science Hall of Fame in 2017. He established the Thomas Eimermann Professorship and the Thomas Eimermann Pre-Law Advisement Center in honor of his college mentor.

River Forest Community Center board of governors, serving as Chair for two of his seven years Hephzibah Children’s Association where he was awarded their Heart of Gold Award in 2015

Commercial Finance Association (now Secured Finance Network) for 25 years, including work on the executive committee

Career Transitions Center of Chicago,

where he served as Chair, and for which he was awarded the Annual Legacy Award in 2017

Advantage Business Capital Welcomes Two New Employees to the Team

Advantage Business Capital, a subsidiary of Central Bank, welcomes two new employees to their growing team. Liz Castillo, senior vice president, is Houston, TX-based and Lauren Hogan, marketing specialist, is Austin, TXbased.

Castillo has more than 20 years of experience in the factoring industry. In addition to her business development role with Advantage, she will continue to serve as the founder and president at the Greater Houston Trucking Association.

Hogan has a background in marketing from the hospitality and digital healthcare industries. New to the asset-based lending industry, she is eager to deploy her skills and expertise in support of Advantage’s business development efforts.

Aequum Capital Welcomes James Farrell as Executive Director

James Farrell has joined as the new executive director of Credit and Portfolio Management. With a distinguished career spanning over 35 years in commercial finance, particularly in senior secured assetbased lending, turnaround management, and business development, Farrell brings a wealth of experience and strategic insight to the firm.

Dan Amato Joins Cahill Gordon & Reindel’s New York Office as a Partner in its Private Credit Practice

Dan Amato is the second partner to recently join Cahill’s fast-growing Private Credit practice, following Peter Williams’ arrival from KKR as co-head of the practice in July. Amato joins Cahill from a global law firm, where he served as head of sponsor finance. Throughout his career, he has focused on guiding private credit funds and alternative lenders through acquisitions, leveraged financings, and a wide range of other financial transactions.

Cambridge Savings Bank Continues to Make Strategic Leadership Changes with Ian Brandon’s Promotion to EVP and Chief Commercial Banking Officer

Ian Brandon’s promotion comes after a more than 17-year tenure with CSB, where he most recently oversaw the strategic direction and management of the bank’s commercial real estate portfolio while serving as head of Commercial Real Estate (CRE). Brandon will now lead the commercial banking division, focusing on strategic growth and client engagement. He will also spearhead the development and implementation of commercial banking products and services, ensuring they meet market demands and client needs.

As part of a larger restructuring of CSB’s commercial lending group, Brandon’s promotion will position the bank for continued success amid evolving market conditions. With the changes, Aidan Hume, previously senior vice president - CRE Team, was promoted to the position of SVP, head of CRE, stepping into Brandon’s prior role to provide strategic oversight and direction for CRE financing and investments operations.

Kevin Teller, who until recently served as SVP, commercial real estate loan officer, has also been promoted to SVP, CRE team leader. Additionally, Laura Miller, who was recently promoted to first vice president, head of Commercial Portfolio Management, will now lead both the CRE and Corporate Banking Portfolio Management teams.

Davis Polk Adds Trio of Asset Management Partners

Davis Polk & Wardwell is continuing its lateral expansion with a trio of asset management partners from Debevoise & Plimpton in New York. Andrew Ahern, Alisa Waxman, and Luke Eldridge are all joining Davis Polk as partners in its investment management practice. Ahern works with sponsors of private investment funds, including buyout, energy and infrastructure, credit, venture capital and funds of funds.

Waxman advises sponsors of private investment funds, co-investment funds, separately managed accounts and complex secondaries covering numerous sectors and strategies, including buyout, growth,

venture, energy, infrastructure, and credit opportunities.

Eldridge advises sponsors of private investment funds, co-investment vehicles and separately managed accounts, covering numerous sectors and strategies, including debt, energy, growth capital, emerging markets, and venture capital funds.

eCapital Welcomes Matthew Tobin as SVP, Business Development Officer, to Drive West Coast Growth

Based in Los Angeles CA, Matthew Tobin will enhance the company’s presence on the West Coast, bringing a wealth of specialty finance experience to the role. Tobin’s career spans several esteemed institutions, including AmeriFactors Financial Group, LLC, Sallyport Commercial Finance, LLC, and Bibby Financial Services USA.

Eastern Bank Announces Senior Leadership Appointments

Following its recent merger with Cambridge Trust and as part of its enhanced focus on product development, wealth management and private banking, Eastern Bank is pleased to announce that executive vice president Sujata Yadav has been named chief product officer, and several former Cambridge Trust leaders have been named to the following roles at Eastern Bank: Jeffrey F. Smith, executive vice president, Wealth Management; Danielle Remis Hackel, executive vice president, chief marketing officer; and Kerri A. Mooney, executive vice president, Private Banking.

Encore Funding Appoints Dale Busbee as Vice President of Business Development

With over 25 years of executive leadership and sales expertise, Dale Busbee brings a wealth of experience to Encore. His professional background spans commercial lending, banking, retail, recruiting, and staffing.

Flagstar Bank Expands Commercial and Private Banking Leadership Team with Key Executive Appointments

Joining Flagstar Bank, N.A.’s senior leadership team, reporting to Rich Raffetto, senior executive vice president & president of

Commercial and Private Banking, unless otherwise noted, include:

Joe Abruzzo, executive vice president and head of Regional Commercial Banking & Corporate Banking.

Rita Dailey, executive vice president, head of Commercial Deposits & Payment Solutions

Mike Mason, executive vice president, head of Credit Products, Commercial and Private Banking, joins Flagstar with more than 30 years of experience in credit risk management, underwriting, credit portfolio strategy, and product development. delivery.

Matt Dalany, senior vice president, head of Specialized Industries Credit Products joins Flagstar with more than 30 years of experience in specialized industries credit underwriting, risk governance, and portfolio management.

Benoit Geurts Joins Gordon Brothers as Managing Director, Intellectual Property, EMEA

Benoit Geurts brings over 20 years of experience advising businesses of all sizes on their intellectual property strategy, mergers and acquisitions, valuations, monetization, and litigation support. Based in London, Geurts partners with the firm’s corporate recovery and global valuations teams to provide valuation, advisory and monetization services for intellectual property (IP) assets to support businesses and their advisors in restructuring and recovery situations across Europe, the Middle East and Africa.

Gordon Brothers Welcomes Kasey Fagan to Drive Business Development in the Midwest

In this role, Kasey Fagan will provide integrated solutions across the firm’s expanded asset services, lending, financing, and trading platform. She partners with Gordon Brothers’ global asset experts to create customized solutions and maximize liquidity for clients and partners.

Hilco Real Estate Announces Major Expansion in Receivership Services

Matthew Mason has joined as senior vice president, promising exciting growth, and

enhanced capabilities for HRE. Mason brings 24 years of experience in real estate and fiduciary services and joins HRE at a time of promising growth.

Hilco’s Disputes Advisory Practice

Announces Strategic Expansion with the Addition of Two Industry Veterans

Hilco Enterprise Valuation Services (HEVS), is excited to announce the strategic expansion of its Dispute Advisory practice with the addition of John Kim as managing director and Florian Leka as director. These appointments underscore HEVS’s commitment to growth and expanding its services to meet the increasing demands of complex commercial disputes, expert witness services, and enterprise valuation services.

Holland & Knight Continues Growth of Financial Services Practice with Addition of Partner Nneoma Maduike in New York

Nneoma Maduike represents many of the largest U.S. and global institutional lenders, regional banks, hedge and private equity funds, commercial finance companies and numerous specialty finance companies.

Holland & Knight Continues Growth of Financial Services Team with Addition of Paul Libretta in New York

Paul Libretta represents issuers, investors, borrowers, lenders, sellers, buyers, hedge funds, private credit funds and other financial institutions in connection with structured finance, securitizations and asset-backed lending transactions.

Leading Restructuring Lawyer Joins Latham & Watkins in New York

Latham & Watkins LLP is pleased to announce that Joe Zujkowski has joined the firm’s New York office as a partner in the Restructuring & Special Situations Practice. Zujkowski represents debtors, ad hoc creditor groups, and individual creditors in in-court and out-of-court restructurings and in executing complicated financing transactions.

Legacy Corporate Lending, LLC Enhances Leadership Team with Appointment of David Smith as Managing Director of Originations

David Smith will be based in New York and will be responsible for leading the origination and structuring of new transactions in the Northeast region. Smith has more than two decades of ABL and restructuring experience across a wide array of industries.

Mitsubishi HC Capital America Welcomes

Lawrence Ridgway to Asset-based Lending Team

Lawrence Ridgway joins as senior business development director, Business Finance. Ridgway will be spearheading the origination and structuring of asset-based lines of credit, collaborating with referral partners, and serving as a vital resource for business owners and trusted advisors for the company.

Daniel Karas Joins nFusion Capital as EVP of Asset Based Lending

In his new role, Dan Karas is responsible for spearheading the strategic expansion of the Asset Based Lending division. Throughout his career, Karas built high-performing teams and drove the expansion of national commercial lending platforms for marketleading organizations.

Sameer Kapoor Bolsters Parker Hudson’s Bankruptcy, Restructuring & Creditor Rights Practice

For more than 20 years, Sameer Kapoor has been at the forefront of the bankruptcy and restructuring sector, representing creditors, commercial lenders, examiners, trustees, purchasers, and commercial debtors in various bankruptcy and commercial restructuring matters. Sameer’s extensive experience includes structuring workout financing, general bankruptcy matters, and restructuring secured and unsecured facilities.

Quasar Capital Names Dustin Green Vice President of Underwriting

Dustin Green brings a wealth of experience in underwriting, credit analysis, and relationship management, having served in key roles within the commercial finance

industry. In his new role, Green will be instrumental in advancing Quasar Capital’s commitment to providing tailored financial solutions, particularly in the areas of assetbased lending and factoring.

Regions Bank Announces Retirement of Ronnie Smith, Appointment of Brian Willman as Head of Corporate Banking Group

Regions Bank announced Ronnie Smith, head of the company’s Corporate Banking Group, will retire at the end of the year following more than four decades of service to Regions and its predecessor banks.

Brian Willman, head of Commercial Banking for Regions, will succeed Smith as head of Regions’ Corporate Banking Group.

Nikki Stephenson, head of Credit Products for Regions, will be elevated to serve as head of Commercial Banking.

Rockland

Trust Names Commercial Banking Officer for North of Boston

Team

Chris Reilly was appointed vice president and commercial banking officer for the Bank’s North of Boston team. He will build relationships with mid-size companies across Northern Massachusetts and Southern New Hampshire. Reilly joins Rockland Trust from Eastern Bank, where he spent 13 years as a VP, business banking relationship manager, and previously, a branch manager.

Rosenthal Names Three Seasoned Professionals to Southeast Team

Rosenthal & Rosenthal, Inc. announced that William Garcia, Kathleen Waldropt and David Zimmerman have joined Rosenthal’s Southeast team. With more than six years of underwriting experience in the commercial finance industry, Garcia joins as VP, Recourse Factoring underwriter.

Waldropt joins Rosenthal as VP, operations manager with nearly 15 years of experience in the commercial finance sector and will oversee operations for the firm’s recourse factoring division.

Zimmerman brings more than two decades of experience in asset-based lending and recourse factoring to Rosenthal, where he serves as business development officer.

US Capital Global Expands New York Office with New Vice President, Michael Cacciaguida

Michael Cacciaguida brings over 30 years of expertise in sponsor and institutional financing solutions. Before joining US Capital Global, Cacciaguida served as vice president of Capital Markets for New Degree Growth, a family office with a portfolio of over 100 companies.

Pankaj Vashisth Elevated to Partner and Chief Compliance Officer at US Capital Global, Assumes Leadership Role for Las Vegas Office

In his new capacity and as securities principal for the group, Pankaj Vashisth will spearhead the group’s administrative operations in Las Vegas while overseeing all regulatory and compliance functions, particularly in private placements, securities, and related services offered by US Capital Global Securities LLC, the group’s FINRA-member and SEC-registered broker-dealer affiliate.

White Oak Commercial Finance Hires

Matthew DeBernardo and Blake Voyles to Bolster Middle Market Origination and Underwriting

White Oak Commercial Finance, an affiliate of White Oak Global Advisors, announced the hiring of two new executives: Matthew DeBernardo as managing director of Originations, and Blake Voyles as head of Lower Middle Market Underwriting. The hires further enhance WOCF’s ABL offerings and capabilities in underwriting and deploying flexible capital solutions for middle-market firms.

Winston & Strawn LLP Boosts Litigation Practice in Washington, D.C. with Addition of Alexandra E. Chopin

Alexandra E. Chopin focuses on high-value international commercial, tort, and regulatory disputes and investigations in the U.S. on behalf of domestic and foreign financial institutions and central banking authorities, global corporations, and foreign sovereign governments and sovereign-owned entities.

Commercial Banking

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Talk to Wells Fargo. No matter where you are in your business life cycle, we can help you explore possibilities and capitalize on opportunities.

Wells Fargo is a proud sponsor of SFNet’s 80th Annual Convention.

Eyes on the Future

SFNet Welcomes its Youngest President in 80 Years

Robert Meyers, managing member and president of Republic Business Credit, discusses his over 10 years of SFNet involvement to where he is today, as well as his goals as SFNet’s incoming president, which include creating a larger and more inclusive community to benefit its members and accelerate access to those in need of capital.

Please provide our readers with some background on your involvement with SFNet over the years.

My first active SFNet volunteer memory was helping Terry Keating, CEO of Access Capital, co-chair a Midwest Chapter education event in 2013 with the various asset-based lending group heads in the Chicago area. As they say, “no good deed goes unpunished.” The following year, Amanda Roberts of RedRidge and Jim Low of Wintrust Business Credit, asked me to be the treasurer of the Secured Finance Network’s Midwest Chapter. I don’t think I fully appreciated at the time that once you say ‘yes’ to the first post, it was actually a four-year commitment, however, I would do it again in a heartbeat as it ended up being a really fun ride with an amazing group.

The Chapter vice president role then followed, and I became the Midwest Chapter president in 2016. In addition to supporting the launch of the Chapter’s Women in Secured Finance Group, we massively increased the number of volunteers, committees and sponsorship. With more engagement across our community, we launched quarterly leadership meetings to build on our momentum. Thanks to the efforts of those 30 or 40 people, combined with all the amazing volunteers that followed, it is one of the largest and most vibrant SFNet chapters.

But, in true SFNet fashion, the ink wasn’t even dry on my Chapter president year when I got a call from the incoming SFNet national president, Andrea Petro, who at the time was running Wells Fargo’s Lender Finance group, and said the Board was updating its governance and wanted to chart a new course for the future of the Secured Finance Network. As is common with many organizations, we needed clearer roles and expectations for our volunteers to be successful. SFNet wanted to move to a 14-person Executive Committee with each having a specific purpose while representing one of the various constituencies of our community. They wanted me to launch the Association’s national Young Professionals group, building upon the great success we had seen in the Chapters’ young professional-focused programming, which today is referred to as Emerging Leaders.

Our first national conference for young professionals had around 100 people attend from across the country, known as the YoPro Leadership Summit, held in 2018 at Winston & Strawn in Chicago. The second year it had more than 150 people in attendance. We’ve continued to hold the Summit across the country, and it is now called the Emerging Leaders Summit. I’m excited that we’re going to be having one in Boston in spring 2025. The best sign of a healthy organization is having the right group of leaders and volunteers gathered together for a common purpose. The founding principle of stewardship is leaving things better for the next generation of leaders. Kat Parker, director of Business Development at HYPERAMS LLC and Will Bence, managing director of Wingspire, both have served as chairs of the YoPro Committee and it is so cool to see what the group has done. It surpassed all of our expectations and clearly has real staying power,

continuing to thrive as it moves around the country. Attendance continues to grow, and it provides an opportunity for people to get involved as a sponsor, panelist, attendee or a volunteer. For many, it is their first experience with our community.

After three years as chair of the YoPro Committee, I was asked to chair the SFNet Annual Convention in New Orleans in 2020. Everyone first imagined an opening reception at the World War II Museum or Preservation Hall with live music and second-line bands, however, despite our early plans, none of those options were available to us due to the pandemic, and we completely pivoted to a virtual event with more than 2,000 attendees. It wasn’t as good as getting together in person, of course, but I think we absolutely made the most of it, and we had a lot of first-time convention attendees, cameo appearances and video interludes as well as about 40 different panels. The ability to include so many people was the best part of the 2020 virtual convention and why we continue to provide virtual engagement opportunities to supplement our in-person programming when it makes sense. It became more approachable and more inclusive, giving people an opportunity to get involved or experience it, to laugh, meet new people, and build business connections.

The final two years of my six years on the Executive Committee were spent leading the SFNet’s Entrepreneurial Finance Committee, which helps plan a conference for 5060 presidents and CEOs around the country to get together and talk about the challenges and opportunities facing our independent finance community.

How has your involvement in SFNet impacted you professionally and personally?

I think a lot of perspective depends on your expectations when you start something. I was lucky to have recently acquired Republic Business Credit before I joined the Executive Committee in 2016, so I had the full support of our incredible team and it joined with Republic’s strategy to bring our platform national. I consider myself very fortunate. Many people would call me crazy for buying a finance company at 32 years old, but my whole perspective has been that we can build something better, together, and create an opportunity for everyone to be successful. I had so much help along the way, whether it was a phone call or an introduction or shared experiences across our community of both successes and, more importantly, failures. Looking back professionally, one of the largest impacts has been the SFNet community of mentors, coaches, friends and caring people, and they appreciate that I’m giving back to our trade association as our way of paying it forward to the next generation.

SFNet’s outgoing president, Barry Bobrow, does large syndication deals for some of the largest banks in the world, and Republic Business Credit focuses on the lower middle market. In the finance world our paths would not have crossed without our mutual desire to pay it forward through the

Secured Finance Network. The things Barry thinks about day to day, macroeconomic, big picture challenges, are significantly different than what one of our non-bank entrepreneurs might think about. So, for us, I think it is this cohort and community that the SFNet brings us all together and, more importantly, creates an opportunity for conversations that would otherwise not happen and empowers us to focus on the needs of all of our members.

Of course, you meet might meet someone by happenstance at one of our events, but I argue you will form a stronger relationship when you’re volunteering together as you get an opportunity to see the work product, dedication, and passion that someone brings without it necessarily being tied to a specific deal or transaction.

You have participated in SFNet’s mentoring program in the past. What role has mentoring played in your career?

SFNet is now on its fourth iteration of its mentoring program, which is presented by the Secured Finance Foundation and the SFNet Inclusiveness Committee. There are 120 mentors and mentees in the program for 2024. The mentors are incredible leaders who want to give back and help our next generation. So far, I have been a mentor twice. What is even more enjoyable is that several of our team at Republic have been mentors and we’ve had at least one mentee in all four of the programs.

Life provides an interesting journey if you will let it. I graduated from the University of Chicago with a really applicable biology degree, studied for the MCAT as my desire was to be a surgeon, however, at the time I thought it would be best to work for a few years prior to making that type of life-long commitment. When I joined the finance and factoring industry, I didn’t have a clue, so I have really been a lifelong learner in our industry. I’ve had about 10 to 15 mentors in my time, some formal mentoring structures, others informal, but all of them were there to help fill in my gaps. When we bought Republic Business Credit in 2016, I intentionally reached out to several people who bought and sold independent finance companies and a few in the banking community to say hello and ask them to sit down with me for 30 minutes to pick their brain. Many of these relationships have continued and have turned into friendships and golf foursomes. In September, I was golfing with Mike Sharkey who is a past SFNet president, as an example of people who were always willing to help along the way.

I fondly remember one of my first SFNet networking events. Rick Barfield, who seemed to know everyone, was one of the first people to make me feel welcome. At my first event, he walked me around and introduced me to a hundred people. That one act of kindness made the room far more comfortable, and now I aim to do the same thing for others.

Without mentorship I wouldn’t be here, or certainly wouldn’t be on the SFNet Management Committee and wouldn’t have

We’ve been relevant for 80-plus years, but to be relevant for the next 80 years means we need to continue to make investments in strengthening, growing and building our community in terms of members and volunteers, and to make sure that we are the center of putting capital to work.

the honor and privilege to be the president of our industry trade association. I will be the youngest president ever of our association and, not that age matters, but that doesn’t happen at this stage of life without so many people who helped along the way. I’m thankful for them, and I hope they smile when they see my photo on a whole bunch of magazines that it doesn’t deserve to be on.

I think if you’re willing to invest and bring your whole self to a conversation, you’ll be amazed at the number of people who would love to help the next generation of leaders and lenders.

I have had a lot of fun volunteering while building an amazing team at Republic. We’re now a wholly owned subsidiary of Renasant Bank, which just announced an acquisition of another bank in the Southeast. Our future team is really set up for success. This goes for Republic and the Secured Finance Network.

What are your main priorities and goals as SFNet president? For me and for SFNet, particularly since 2016, we’ve had a real focus on the future, and this momentum and commitment to understanding who we are and who we want to be, starts from a strong sense of community. Our industry is far stronger together than we are apart. The Secured Finance Network has done an incredible job over the last 80 years of being a strong community for our lenders, factors, lawyers, appraisals firms, field examiners, consultants, private equity, and bankers.

One of the things that makes our organization different is that, to serve on the Management Committee, you must be a lender.

Some of our priorities are to build upon the incredible success and strong foundation from past SFNet presidents, including Barry Bobrow, Jennifer Palmer, Peter York, Dave Grende, John DePledge, Jeff Goldrich, Andrea Petro and many more, who served before I became involved. Every five years SFNet has a planning meeting where we look to build strategic pillars over the next five years. The Executive Committee got together in April 2024 in Nashville under Barry’s guidance, and in 2025 we will continue to build on that investment for our future and our community.

A big piece of that for us and for me is continuing to invest and build within our chapter network. I would say our chapters are all in better spots than they were ten years ago. We’ve seen a resurgence since the COVID lull within our chapter community, but I think we need to continue to build and grow. One of the best ways to do that is to spend time together so that while we’re building the Secured Finance Network community, we’re making sure that we’re also building the chapters along with it. It was fun to chair our SFNet IMPACT awards this year, which honored the New York and Michigan Chapters for their remarkable 2024, but so many other chapters did an amazing job.

Some of our priorities are to build upon the incredible success and strong foundation from past SFNet presidents, including Barry Bobrow, Jennifer Palmer, Peter York, Dave Grende, John DePledge, Jeff Goldrich, Andrea Petro and many more, who served before I became involved.

I believe we should be, can be and will be a larger and more inclusive community in the coming decades. More importantly, I want us to be a stronger community and that comes from a shared sense of purpose and advocacy. Lenders are at the center of so much, and I aim to include more private credit folks, banks and factors in where SFNet is going. We need to be viewed as a resource for advocacy, whether that’s state or federal. The stronger our community is, the better we are at supporting each other, especially our clients, across our industry verticals, whether it’s staffing, manufacturing, distribution, export, import, consumer goods, durable goods, or non-durable goods. The stronger and larger our community is, the more impactful and helpful we’ll be not only to members but, more importantly, to those that need access to our capital.

What challenges and opportunities do you see for the industry as a whole and for SFNet in 2025?

I think there are big challenges on the horizon. We had the first interest rate cut in nearly four years, along with a lot of mixed and uncertain macroeconomic news. There were some soft job and labor numbers that have come out. So, there’s this early indication of some potential recessionary fears that have surfaced, but the stock market doesn’t feel or look that way at the moment. We’re always aware of the macro landscape, but during a recession there’s probably more capital put to work in our industry and our members provide that across the credit spectrum. It’s both a fiscal challenge and an opportunity for our members to expand the impact of our network.

Whether it’s our non-bank or our bank communities, SFNet centers around one of our chief missions: advocacy, which is what we’re doing to help our industry, to build our industry, support our industry and provide unfettered access to working capital for small businesses across the world.

We continue to have advocacy-related challenges, with the state financial disclosure bills as well as federal legislative and regulatory challenges, such as Basel III. It goes back to stewardship, and we have to stay on top of these issues and

make sure that we’re there to be a resource to politicians, committee members and the drafters of legislation so it is achieving what they’re trying to achieve, instead of risking unintended consequences, such as decreasing access to capital to clients. Rich Gumbrecht does a phenomenal job getting ahead of issues that impact our industry and always leads in the best interest of our members. It’s an honor to support him, our members and our community.

The other big ongoing challenge is remaining relevant. We’ve been relevant for 80-plus years, but to be relevant for the next 80 years means we need to continue to make investments in strengthening, growing and building our community in terms of members and volunteers, and to make sure that we are the center of putting capital to work.

When you aren’t working or volunteering for SFNet, what can you be found doing? How do you find time to balance everything?

Time management or work-life balance is a cool thing to read about, and I was explaining this to someone that joined Republic a few months ago, but it is impossible to balance it equally in my opinion. In my 20s, I was way too glued to work, but at the same time, that allowed me to buy a finance company. So, it wasn’t wrong at the time, but it sure wasn’t balanced. Since then, my wife and I have had three young children, all boys, who are now five, four, and one, which, if you’ve been following along in the article, means all of them were born since I started serving on the SFNet Executive Committee. I think balance fluctuates during the week, day and times of the year. One’s goal should be to show up, be present and be 100% where you are at the moment.

I think communication is a big thing, both with my wonderful wife and our kids. When I’m home, my goal is to be there one hundred percent in each phase of my life. For example, phones are not allowed at the table during any meal, so I am there with my kids and my wife and they’re there with me. Of course, there’s tons of stuff going on, but for that hour or two, I am fully present and engaged.

I think everyone wants work-life balance to be A or B, and I think it’s all very gray. Some Tuesdays my family can get more time than other Tuesdays, but we have a family meeting every Sunday to talk about what’s coming up for the week. Is dad in town? Is dad out of town? We’re getting ready to have dinners and we ask the kids’ input for what they’d like to eat. My wife created a Meyers Family Café breakfast menu that the kids can review for the weeks’ options. When I go on vacation, I turn my phone off, and when my staff goes on vacations, I cover for them so that they can turn the phone off because I do really worry about people burning out.

When I’m not with my family, on the way to a sporting event or walking the kids to school, which is one of my favorite ways to start the day, you’ll often find me on a golf course in the warmer months, typically teeing off at 6 or 7 a.m. with a

few people from our industry so I can get a little bit of work and enjoy nature at the same time. I really enjoy biking and traveling as well.

I have gotten really into cooking also over the last several years and love trying some of the recipes you might find at famous spots around the country.

Is there anything you’d like to add?

I fundamentally really enjoy what I do. I enjoy Republic, being on the SFNet Management Committee, and having conversations with so many people I never otherwise would have met. I love when I hear that one of our Women in Secured Finance events is sold out. I love what we do, and I really have fun doing it. We spend a lot of time working or volunteering, so I insist on making it fun.

One of my favorite parts of the year is at the SFNet 40 Under 40, taking a step back and looking around the room to see the families who support and recognize the achievements of our members. With the Hall of Fame, where we get a chance to recognize legends and titans of our industry, it’s the reverse – it’s the father or the mother on stage and their kids in the audience smiling and clapping and realizing that their parents made an impact on an industry of thousands and thousands of people. I really love to see the smiles and the true joy across so many people’s faces that they get from volunteering or being recognized. I’m the proudest of all the ways in which people can get involved, have some fun, meet new people, and make a difference through SFNet. I love our industry’s ability to recognize, celebrate and honor people in our industry. Whether it’s at Republic, at home, in the community or volunteering at the SFNet, my personal mission is to create an environment for people to be successful, while being a catalyst for change. I feel blessed to be a part of it and look forward to the next 80 years!

Appraisers See a Mixed Picture for Valuations

Secured lenders increasingly rely on appraisers for swift and accurate valuations amid rising complexities in asset-based lending. With business bankruptcies up 40% and ongoing supply chain challenges, appraisers must adapt quickly to maintain their vital role in the underwriting process, ensuring lenders receive the critical insights needed to navigate this evolving landscape.

Secured lenders are increasingly dependent on appraisers providing accurate valuations and those assessments are needed quicker than ever. As deals become more complicated and competitive, asset-based lenders rely on adept and knowledgeable appraisers to help facilitate the underwriting process no matter the product or economic cycle. In turn, appraisal costs are on the rise, and secured lenders are feeling the pinch.

Whether it’s COVID-19 or geopolitical conflicts impacting the supply chain, or the recent rise in corporate and personal bankruptcy filings, appraisers are constantly adapting to the new normal. According to data from the Administrative Office of the U.S. Courts, US business bankruptcy filings were notably higher for the year ended June 30, 2024, up 40% from the year prior. But despite the uptick in bankruptcies, Alex Sutton, managing director, head of research, at Gordon Brothers, argues that the majority of companies remain healthy and are “benefiting from increasing availability of capital from the secured lending market.”

Of course, there are lingering effects of the pandemic and the supply chain crisis. According to Sutton, aerospace, in particular, is still experiencing long lead times and capacity shortages. Certain building product sectors, such as lighting and hardwood flooring, have been active in the distressed space. Dollar stores are also seeing a decrease in consumer demand. Most would suspect that these lower-end retailers would benefit from inflation and the rising costs of goods. But Sutton notes that dollar stores are simply sitting on too much inventory, making the mistake of ramping up too much during the pandemic. Overexpansion in the dollar store space and price increases on items in the stores have also added to the oversupply of inventory.

And, as Americans went back into the office and the pandemic cloistering in the home ended, the demand for alcoholic beverages, especially higher-end distilled bourbons and whiskeys, slowed. Sutton notes that a decade of increased production in this industry and the flood of new brands into the marketplace couldn’t have come at a worse time. “We are seeing too much inventory and a weakness in pricing,” he adds. Plus, many new entrants in the space are sitting on extensive amounts of bulk inventory, leading to the question as to where it will end up.

Supply chain problems did serve to temporarily and artificially inflate the value of some in-demand items, says Stan Czupryna, senior appraiser at Loeb Equipment. He notes that mask and some test making lines are now sitting in warehouses with little to no hope of recovery. Czupryna explains it’s the charge of appraisers to constantly educate the secured lending community, especially when industries experience a boom and then demand for their products wane. “We all have a duty to elevate this industry and let the banks

TIM ANDERSON Hilco Valuation Services
RYAN DAVIS Tiger Valuation Services
STAN CZUPRYNA Loeb Equipment
JONATHAN DEPTULA Hyper Valuation Services
ALEX SUTTON Gordon Brothers
RICHARD HAWKINS Atlantic Risk Management

and all lenders know they are getting the right information each and every time,” he says. “We go in with a blank canvas and come up with an opinion on value that we have to support.”

Czupryna notes that appraisal firms, large and small, served the secured lending industry during the lockdown, despite limited access to businesses, by using an in-depth knowledge of inventory and historic and last-minute valuations. Appraisers are now benefiting from being back on the ground 24-7, when needed. But he is noticing other trends in valuations. Light equipment and microbreweries are struggling for the moment, with a glut of inventory and machinery. On the other hand, valuations remain strong for nutraceuticals and pharmaceutical manufacturing equipment. Post-pandemic, and as always, appraisers are adjusting to the new normal.

For instance, order cancellations and a slowdown in supply has caused some retailers to adjust their thinking, and appraisers as well. “There was a reactionary surge in demand for some products and a valley of supply,” notes Ryan Davis, executive managing director of Tiger Valuation Services. Now, some industries are oversupplied, and liquidation may be the inevitable next step. Discretionary items are certainly more at risk, Davis says. “Our expertise is knowing price elasticity and really knowing how to liquidate items. But retailers and manufacturers are working through the pendulum swing.” He credits appraisers for not overvaluing inventory when demand was artificially inflated from temporary pandemic demand. “We knew this was a short-term event,” he says.

did, and now they’re still dealing with over-inventory positions,” Anderson adds.

Smaller companies are

turning to Fulfillment by Amazon to quickly put their items into the consumers’ hands. Amazon handles the inventory in their own facilities and does all of the fulfillment. The implications of “using another company’s intellectual property platform and warehouse space means that Amazon holds all the cards, and

that can have an impact on appraisals and liquidation,” Anderson explains.

Tim Anderson, executive vice president at Hilco Valuation Services, remains surprised by the number of secured lenders who are still shocked by the lasting impact of the pandemic across certain industries. Companies ramped up production of home goods and hobby supplies, like fishing gear and exercise equipment, but now the market for it has cooled. “Some companies thought the good times would never end, and they

But there are headwinds in the economy, and Anderson is expecting to see an increased frequency of appraisals. “It’s harder to liquidate items, like fashion brands, if we head into a recession,” he says. “Consumers stop buying and that will impact asset values.” It’s an expected cycle, and not unprecedented. In that environment, companies like Peloton and Bowflex, will be harder to value. “This isn’t simply equipment that can be easily appraised,” Anderson notes. “These are really technology companies that rely on connectivity. It’s the customer lists and the online library that are important, and the equipment is useless without them.” The same is true for home monitoring systems that require monthly subscription fees. “There’s not a ton of worth in the security cameras, and we have to get lenders to get beyond thinking this is just an inventory deal,” he adds. And while retail can be highly volatile and item specific, it’s also subject to the vagaries of consumers and changing economic cycles. Anderson notes that appraisers are at the ready to appropriately analyze subsectors in it to provide a more complete perspective. Fulfillment by Amazon, for example, is giving secured lenders pause. “We really all need to understand the risks associated with it,” he says. Smaller companies are turning to Fulfillment by Amazon to quickly put their items into the consumers’ hands. Amazon handles the inventory in their own facilities and does all of the fulfillment. The implications of “using another company’s intellectual property platform and warehouse space means that Amazon holds all the cards, and that can have an impact on appraisals and liquidation,” Anderson explains.

Amazon may be complicating the retail sector, but according to Jonathan Deptula, president at Hyper Valuation Services, some retailers are less problematic than others. “Certain

industries, like furniture and home décor, are struggling, after the pandemic,” he notes. Americans are no longer looking to the comfort of home amidst the lockdown. But the direct-toconsumer space and higher-end luxury items are holding value. He credits much of that growth to younger shoppers who are staying put with parents longer and, as a result, have more disposable income to spend.

Deptula does see an uptick in disposition activity across industries, and appraisers are working extra hard to respond quickly to their secured lender clients. “We are trying to execute better than ever, yet be the least intrusive to businesses,” he notes. The larger appraisers benefit from data sharing with the big banks, larger independent secured lenders, and private equity. But technology cannot facilitate every deal. “It’s harder to use as much technology as we would want because every deal is unique,” he adds.

Deptula predicts the 4th quarter will be stronger than the period before for secured lenders and, consequently, appraisers. He points to the benefit of a drop in interest rates for some industries, as well as the impact of economic uncertainty for others.

“The appraisal business allows for lenders to understand values during distressed times, but also is able to help fast growing business to monetize assets to fuel growth.”

to come up with a valuation, but the increase in private credit in secured lending is complicating the process. “They have a different perspective, and they also have different timescales in relation to the execution process,” he says. “There is going to be more pressure put on third-party organizations.” Private equity is, simply put, quicker to execute than banks. So, appraisers have to respond to those new demands.

Hawkins notes that the pressure is always on the appraiser to come up with a valuation, but the increase in private credit in secured lending is complicating the process. “They have a different perspective, and they also have different timescales in relation to the execution process,” he says.

But as lead times increase on some products, appraisers are becoming quite circumspect in their valuations. The shipment of raw goods is part of the problem. It’s always a challenge to come up with fair market value, but the pressure is on for appraisers to move more quickly than ever, says Richard Hawkins, CEO at Atlantic RMS. He adds that “the result of extended lead times is that companies are carrying more inventory than they used to.” The pandemic and supply chain issues are certainly to blame, but he notes that some sectors are faring better than others. “It’s all related to load, demand, cyclical issues, and then geopolitical pressures in relation to commodities, and specifically to energy,” he adds. Hawkins notes that the pressure is always on the appraiser

Despite those pressures, appraisers are reaping the rewards of a growth in secured lending players, as well as a shift in the types of companies they lend to. “Retail has always been a large part of secured lending, but the growth and shift into industrials, as well as the increase in products and machinery related to the green economy, are expanding the market,” Sutton notes. The increasing sophistication of appraisers is making it much easier for secured lenders to underwrite new products and goods or value more complex items, including work in process or intellectual property. Whether it’s green products, the internet of things, or digitally-native brands, the marketplace is constantly changing, and, for now, appraisers are meeting the demands of their clients. Sutton notes, “At the end of the day, it’s all about the ability to execute.”

Myra Thomas is an award-winning editor and journalist with 20 years’ experience covering the banking and finance sector.

Part 2

Taking Security in Cross-Border Lending: (How Do You Know) the Steps to Take or Whose Law Is It Anyway?

Part 1 of this article appeared in the September/October issue of The Secured Lender.

Taking Security: Security Rights in Intangible Assets

In the case of tangible personal property, the general principle to look to the laws of the location of the property captured in the phrase lex rei sitae provides some useful guidance for the secured lender on how to determine the steps that it will need to take in order to establish its security rights to such property. But what happens in the case of intangible property, where there is no such location? If the assets are the receivables owing to a company, whether arising from the sale of goods or services, or from other extensions of credit, or if the assets are a bank account or intellectual property, how does the secured lender determine the steps it should take to get rights to its security?

The Key Relevant Rights of the Secured Lender and “ThirdParty Effectiveness”

In the case of an intangible asset like a receivable, such matters become quite complex, because it is not just a matter of the rights of the secured lender relative to the owner of the asset (and other creditors of the owner), but another key party: the obligor on the receivable (referred to as an “account debtor” in the UCC and simply a “debtor” in most jurisdictions outside of the United States).

As with tangible assets, the secured lender will want to comply with the law of the location of the grantor of the security right (whether in the form of a security interest, security assignment, pledge, charge or other form of security right) since the laws of such jurisdiction will likely be where most of its creditors are located and where most likely the company will be subject to an insolvency proceeding. This means for a company organized under the laws of a State in the United States, the secured lender will look to the UCC. For a company organized under the laws of England and Wales, or the Netherlands, or Germany, the secured lender will look to the steps needed to establish its rights to the receivables under the laws of England and Wales, the Netherlands or Germany, wherever the company is organized.

But whereas with tangible assets the secured lender needs to consider the laws of the location of the inventory or other tangible assets, with intangible assets like receivables, the secured lender will need to consider the laws where the obligor on those receivables is located.

The secured lender will need to identify the law that will establish the effectiveness of its rights as against other creditors and in the event of an insolvency (which under the UCC is through “perfection” of its security interest), but in addition must also identify the laws that will establish its rights relative to the obligor on the receivable. Addressing the rights of the secured lender as to both categories of parties is commonly referred to as a matter of “third-party effectiveness” of the secured lender’s position.

With receivables as security, in addition to having a secured claim that will be recognized in the event of an insolvency or having priority over a subsequent consensual or non-consensual lien or pledge (like a judgment lien creditor or a taxing authority), the secured lender will also expect that: after a default it may notify the obligor on the receivable of its rights and the obligor will be required to pay the secured lender in order to discharge the debt under the receivable, and if the obligor nonetheless pays the company after such notice, it will still be required to pay the secured lender, after a default, the secured lender has the right to enforce the right to payment if the obligor fails to make it, and the secured lender will have an effective security right notwithstanding any prohibitions on assignments (whether as security or outright) or prohibitions on the grant of security rights (commonly referred to as an “antiassignment clause” or “ban on assignment”) in the contract between the company that owns the receivable and the “debtor” obligated to make payment on it.

For a company based in the United States with customers located only in the United States, the UCC is relatively clear on each of these points.

Section 9-406(a) of the UCC expressly provides that if the secured lender sends a notice to the obligor that meets certain basic conditions, the obligor must pay the secured lender, and if it pays the company instead must still pay the secured lender.

Section 9-607 of the UCC expressly says that the secured lender may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the grantor of the security interest with respect to the obligation of the account debtor or other obligor.

Section 9-406(d) of the UCC says that a term in a contract between the buyer and seller of goods and services that prohibits the grant of a security interest in, or an assignment of, the receivable arising under the contract (the “anti-assignment clause”) is “ineffective”.

Matters get a bit more complicated when dealing with other types of receivables that constitute “payment intangibles” as defined in the UCC and other types of contract rights even with respect to obligors in the United States but the principles are set out in the UCC.

DAVID W. MORSE Otterbourg P.C.

What if the Obligor is Outside of the Grantor’s Jurisdiction?

But, as with a U.S. based company with inventory in Mexico, what happens if the obligor on the receivable (the customer) is located outside of the United States? What law does the secured lender turn to in order to establish its right to get paid from the obligor?

Suppose a company based in New York, organized under the laws of the State of Delaware, is selling goods to a company in Germany and the lender to the New York-based company wants a security interest in the resulting receivables. First, to establish the rights of the secured lender in the event the borrower becomes subject to a case under Chapter 11 or Chapter 7 of the U.S. Bankruptcy Code and to establish the priority of the rights of the secured lender to the receivables under applicable laws in the United States as against other creditors of the New York based company, the secured lender will “perfect” its security interest in the receivables by complying with the laws of the location of the company, which under the UCC, since it is a “registered organization,” will be Delaware. The same analysis applies to obtaining the rights in tangible assets.

Different Jurisdictions, Different Answers

Different jurisdictions will have different rules as to the laws that the secured lender must satisfy to have the rights against the obligor located in that jurisdiction to get paid on receivables that it owes and have been pledged to the secured lender.

But perhaps even more significantly, different jurisdictions will have different rules for even establishing the effectiveness of the security right of the secured lender as against the grantor of the security right under the laws of the jurisdiction in which the grantor is located as discussed below.

Generally, there are three possibilities for laws that may be applicable either for purposes of enforcement of payment or other basic rights of the secured lender with respect to a receivable:

But now, as to the secured lender’s rights as against the obligor on the receivable, isn’t it necessarily required to look to the laws of Germany? Will the laws of Germany find compliance with the steps set out in the UCC sufficient under German law? While alternatives may exist for obtaining a judgement in the United States against an account debtor that fails to pay, that does not get to the way the secured lender would prefer to realize on its receivables collateral.

Here’s the problem. While it may still be a matter of some discussion, it seems that the Rome I Regulation does not address “third-party effectiveness” at least to the extent of establishing the rights of the secured lender as against other creditors or in an insolvency and in any event is generally otherwise subject to different interpretations in various countries.

The same question arises if a Dutch company is selling goods to a German company. As it complied with the UCC in the case of a U.S.-based company, the secured lender will comply with the laws of the Netherlands in the case of a Dutch company, to establish its rights to the receivables, but will that be sufficient if it notifies the German obligor to pay it or seeks to enforce payment in Germany against the obligor?

the law of the location of the company granting the security right (that is, the grantor, pledgor or assignor),

the law that governs the underlying contract between the seller of goods or services that gives rise to the receivable (the seller being the party granting the rights to payment to the secured lender as security) and the buyer of the goods or services (the obligor with respect to the receivable), in the case of trade receivables, or the law of the jurisdiction that governs the agreement between the secured lender and the grantor that gives rise to the secured lender’s rights, whether a security agreement, a pledge agreement, a security assignment or assignment.

The first option is easy. The secured lender will always take security under the laws of the jurisdiction in which the owner of the assets is located as noted above. The second possibility is one that is more challenging but as discussed below, very important. For the secured lender looking at a cross-border financing involving intangible assets like receivables “the law governing the receivable” is a key concept and in some ways is the analog to the physical location of an asset like inventory under the principle of lex rei sitae. The law that governs

the contract between the seller of the goods or services owed the receivable, who is the grantor or assignor to the secured lender, and the buyer of those goods or services obligated to pay the receivable, can be of critical importance to the secured lender.

Take the EU for Example: Rome I Regulation

In the case of the German obligor, for example, since Germany is a member of the European Union (EU), the secured lender must necessarily look at the “Rome I Regulation” (just as would be the case for an obligor located in any of the other 27-member countries of the EU). The EU adopted the Rome I Regulation on June 17, 2008, as Regulation 593/2008 on the law applicable to contractual obligations (the successor to the Rome Convention on the law applicable to contractual obligations of 19 June 1980 (the Rome Convention)).

Article 14 of the Rome I Regulation has three parts.

First, Section 1 says that the relationship between the secured party (or “assignee” as referred to the Regulation) and the owner of the receivable or other “claim” (referred to as the “assignor”) that is granting the security right or making the assignment to the secured lender is governed by the law that applies to the security agreement or other “contract” between the “assignee” (the secured party) and the “assignor” (the grantor).

Second, Section 2 says that the law governing the receivable that is subject to the security right governs (i) the relationship between the party owed the receivable (the grantor or “assignor”) and the party obligated to pay the receivable (the account debtor or “debtor”), (ii) the assignability of the receivable or other claim, (iii) the conditions under which the security right can be “invoked” against the account debtor and (iv) whether the account debtor’s obligations have been paid and satisfied (or as the Regulation says “discharged”).

Finally, Section 3 concludes that Article 14 applies to outright transfers of receivables or other claims, and transfers of receivables or other claims by way of security and pledges or other security rights over receivables and other claims.

Interpreting Rome I Regulation and Other Challenges

Here’s the problem. While it may still be a matter of some discussion, it seems that the Rome I Regulation does not address “third-party effectiveness” at least to the extent of establishing the rights of the secured lender as against other creditors or in an insolvency and in any event is generally otherwise subject to different interpretations in various countries. In at least one case, the European Court of Justice has said that Article 14 of the Rome I Regulation does not apply to matters of third-party effectiveness. BGL BNP Paribas SA v. TeamBank AG Nurnberg (C-548/18 EU:C:2019;848; [2019] I.L.Pr. 39. But even beyond the matter of “third-party effectiveness”, in some countries the effectiveness as against

the owner of the receivable (whether a grantor, pledgor or assignor depending on the instrument used) may be based on the laws of a jurisdiction other than the laws in which the grantor or assignor is located.

On the basis of Section 1 of Article 14 of the Rome I Regulation, if a Dutch borrower pledges a receivable owing to it from a German obligor to a secured lender pursuant to a pledge agreement governed by Dutch law, under German law, such pledge agreement should be sufficient for purposes of the rights of the secured lender as between the secured lender and the owner of the receivable under German law (subject to general contract principles). And, in fact, this would be the case under German law, if “the law governing the receivable” is Dutch law.

German law has taken the view that the law governing the underlying contract between the buyer and seller that gives rise to the receivable governs both the effectiveness of the security assignment between the secured lender and the grantor of the security as well as the rights of the secured lender against other creditors and other third parties, and including the obligor on the receivable. On this basis, if a German company is selling goods to a Dutch company under a contract governed by Dutch law, then a German law governed security assignment would not necessarily be sufficient to establish the secured lender’s rights, even aside from matters of third-party effectiveness. Instead, German law would require compliance with Dutch law, since Dutch law governs the receivable. Irish law is similar. In Ireland, the grant of a charge by an Irish company on a receivable governed by Irish law would be sufficient under Irish law, but it would likely not be effective if the receivable were governed by German law, even for purposes of such charge under Irish law.

By contrast, in the Netherlands, under Dutch law the applicable law for purposes of both the effectiveness of the security right against the pledgor of the receivable and the effectiveness against other creditors and an insolvency administrator is the law which governs the pledge agreement -- taking the principle in Section 1 of the Rome I Regulation and applying it not only to the choice of law in the pledge agreement as between the secured lender and the grantor of the security right (or pledgor), but also to the effectiveness against other third parties. If a Dutch company becomes subject to an insolvency proceeding in the Netherlands a pledge of the receivables that satisfies the requirements of Dutch law will be recognized in such proceeding regardless of where the obligor on the receivables is located or the law governing the receivable.

English law would take a similar view (and at the end of the “transition period” under the applicable withdrawal agreements between the U.K. and the EU, and corresponding legislation, which occurred on December 31, 2020, Rome I was converted into UK law as retained EU law, although amended by UK legislation).

Under Article 87 para.3 of the Belgian Code of Private International Law, it is the law of the country where the pledgor or assignor of the receivable to the secured lender has its habitual residence ( residence habituelle ) at the time of the grant of the security right that applies to the effectiveness of the secured lender’s rights to the receivable as against third parties. To the extent that the Luxembourg Securitisation Act 2004 may be applicable it also provides that the law of the jurisdiction of the location of the “assignor” governs the effectiveness of the assignment as against third parties.

Ultimately, the significance of these issues in any given transaction may be reduced if the owner of the receivables is selling its goods or services under contracts with its customers governed by the laws of its own jurisdiction. If the German based assignor of the receivables is selling its product to the Dutch company on terms and conditions governed by German law, then the taking of a security assignment governed by German law will be sufficient. Or if the Dutch company is selling goods or services to the German company under contracts governed by Dutch law, then under German law this should be sufficient.

basis, the secured lender must look to “the law governing the receivable” to determine whether any anti-assignment clause that appears in such contract is enforceable. So, for example, if New York law was the law governing the contract between buyer and seller, then it would be clear that such a clause is “ineffective” under the New York UCC. But, if a Dutch company is selling goods to a German company, under a contract governed by Dutch law, what would be the outcome? Under Dutch law, such a clause would be effective and therefore the secured lender would not get a valid pledge of the receivable.

The EU has attempted to address these differing views with the publication on March 12, 2018, of a Proposal for a Regulation to govern the law applicable to the third-party effects of assignment of claims (the “EU Assignment Regulation”). On February 13, 2019, the Presidency of the Council of the European Union prepared a revised version and on June 7, 2021, the EU approved a mandate for negotiations.

The secured lender may also consider the likelihood that an insolvency proceeding of its borrower or guarantor will be in a jurisdiction where there is an insolvency official that will act for the company in pursuing the payment of the receivables, in which case, the secured lender’s rights will not need to be considered in the jurisdiction of the location of the obligor on the receivables.

The Effectiveness of “Anti-Assignment Clauses”

Section 2 of Article 14 says that it is the law of the contract between buyer and seller that determines the assignability of the receivable (which would seem to cover the enforceability of an “anti-assignment clause”, or “ban on assignment”). On this

If the Dutch company were selling goods to a German company under a German law governed contract, the issue would be how German law views such a limitation or prohibition. In that case, Section 354a of the German Commercial Code ( Handelsgesetzbuch – HGB ) provides that in the case of a transaction between “merchants” such a clause is not enforceable (although such prohibitions may affect whether a payment by the account debtor to the grantor (or “assignor”) after notice to the account debtor of the assignment of the receivable discharges the account debtor from its obligations under the receivables, as well as the rights of the secured lender being subject to any amendments to the underlying contract and other issues).

Interestingly, as to the effectiveness of antiassignment clauses in the underlying contract between the seller and buyer, comment 3 to UCC Section 9-401 says Article 9 of the UCC “does not provide a specific answer to the question of which State’s law applies to the restriction on assignment”.

Proposed Legislative Solutions

The EU has attempted to address these differing views with the publication on March 12, 2018, of a Proposal for a Regulation to govern the law applicable to the third-party effects of assignment of claims (the “EU Assignment Regulation”). On

February 13, 2019, the Presidency of the Council of the European Union prepared a revised version and on June 7, 2021, the EU approved a mandate for negotiations. As of December 2023, according to a report from the European Parliament, “interinstitutional trilogue negotiations are ongoing”.

The general principle under the proposed EU Assignment Regulation for determining the law that governs the establishment of the rights of the secured lender is the law of the “habitual residence” of the “assignor” (i.e. grantor or pledgor), with different rules for bank accounts and securitizations and certain other specific categories of transactions. At this point, it seems that the enactment of the EU Assignment Regulation is very much an open question having encountered resistance from different constituents.

The United Nations Commission on International Trade Law (UNCITRAL) has prepared the United National Convention on the Assignment of Receivables in International Trade and Factoring of December 12, 2001, which also establishes conflict of law rules. The general rule there as well is that the jurisdiction in which the assignor is located governs the priority of the rights of an assignee in the assigned receivable. Although signed by the United States and three other countries, it has not come into force which requires action by five countries.

There does not appear to be any imminent legislative solution to help the secured lender in its quest for greater certainty and simplicity in knowing how to establish its rights to security.

Consequences for the Secured Lender

Taking security in a cross-border financing involves extra steps not required for a purely domestic financing. These additional steps include both diligence and additional security documents governed by laws of different jurisdictions.

In the case of a tangible asset like inventory, it may require security documents and other steps required to comply with the laws of the location of the inventory. In the case of an intangible asset like receivables, notwithstanding the various interpretations and ongoing controversies around the Rome I Regulation, and for purposes of jurisdictions outside of the U.S., the U.K. and the EU, given the significance of both the laws of the location of the “assignor” (the grantor) and the law governing the underlying contract between the buyer and seller in the case of trade and similar receivables, a critical part of the diligence of the secured lender will often be to review at least the major contracts of its borrower or other grantor of the security right to see the laws that govern such contracts.

This, of course, presents a number of practical issues depending on the nature of the company’s business. A company may have a few large contracts with major customers or dozens or more smaller contracts. It may have “standard terms and conditions” that generally apply to most of its sales

or may have specifically negotiated contracts with customers. There may be just a purchase order or a purchase order issued by the customer (the account debtor) and an invoice issued by the seller (the grantor or assignor; the owner of the receivable). And there may be circumstances where no governing law is stated. The secured lender will have to make decisions as to how it wants to approach these circumstances as a practical matter.

In addition to the review of customer contracts, financings based on receivables may require determining whether such contracts include some version of an “anti-assignment clause” and then an analysis of the scope of such “anti-assignment clauses” under the law governing those contracts, as well as additional security documents in different jurisdictions.

Taking security in a cross-border financing requires a broad sense of how to determine the laws that need to be addressed so that the secured lender understands the scope of the rights that it has to its security.

David W. Morse is a member of the finance practice of the law firm of Otterbourg P.C. in New York City and chair of its international finance practice. He represents banks, private debt funds, commercial finance companies and other institutional lenders in structuring and documenting domestic and crossborder loan and other finance transactions, as well as loan workouts and restructurings. He has worked on numerous financing transactions confronting a wide range of legal issues raised by Federal, State and international law. Morse has been recognized in Super Lawyers, Best Lawyers and selected by Global Law Experts for the banking and finance law expert position in New York. Morse has been a representative from the Secured Finance Network (formerly Commercial Finance Association) to the United Nations Commission on International Trade Law (UNCITRAL) on concerning secured transactions law and is a member of SFNet’s Hall of Fame.

Celebrating the Achievements of SFNet Chapters

The Secured Finance Network’s 20 Chapters are comprised of professionals with great insight and experience. From golf outings to educational events, several Chapters shared their highlights from the past year.

Atlanta

The SFNet Atlanta Chapter focuses on bringing value to its members, sponsors and community. With support from its 36 sponsors, the Chapter is able to offer high-quality networking and educational events all while giving back to the community through financial donations and philanthropic efforts. The Atlanta Chapter’s membership has grown over 30% in the last five years, with its emerging leaders membership almost doubling in that same time. The Chapter hosts a diverse calendar of events from networking and education events to baseball and golf outings. It participates in joint events every year with various TMA and SFNet Chapters throughout the Southeast, helping to expand its reach within the Southeast region. SFNet Atlanta is focused on growing its membership among emerging leaders and women. The Atlanta Chapter of Women in Secured Finance will participate in its first Charity Tennis & Pickleball event to support the fight against breast cancer, and they hope for it to be an annual event. In addition, its annual golf tournament raises over $5,000 for local charities and chapter members volunteer over 50 hours a year for Cure for Childhood Cancer. Understanding the need to encourage the next generation of secured lenders, the Atlanta Chapter is active in the college community, conducting six guest lectures at Kennesaw State University. The Chapter looks to expand this program to other local institutions. The board is dedicated to the continued growth and success of the Atlanta Chapter and bringing value to the next generation of leaders.

Europe

The SFNet Europe Chapter recently launched its inaugural Women in Secured Finance (WISF) program, marking the beginning of a new initiative for the Chapter’s 160 members. The event, which was graciously hosted at Norton Rose Fulbright’s London office on August 21, highlighted the Chapter’s commitment to fostering growth and connection among its members, nearly a quarter of whom are women.

The kick-off event was a speed networking session that drew nearly 70 participants. Attendees were divided into two groups: those with less networking experience, eager to develop their skills, and those more comfortable with networking, willing to share their expertise. There were multiple five-minute, one-onone sessions, allowing for dynamic exchanges, followed by a drinks reception that provided additional networking opportunities.

The Atlanta Chapter’s Emerging Leaders Casino Night at Greenberg Traurig

The Europe Chapter held its inaugural Women in Secured Finance event at Norton Rose Fulbright’s London office.

This event is just the first of many formats planned under the WISF program. Future sessions will focus on key industry updates, personal branding, thought leadership, and, of course, more networking opportunities.

Attendees were also provided with valuable networking tips, such as the importance of preparation— understanding expectations, knowing your business, tailoring your approach to specific events, and effectively introducing yourself. Other tips included the significance of first impressions, starting a conversation using the 30/70 rule, employing the FACE technique, and the importance of following up after an initial meeting.

Plans are already underway for future WISF events, not only in London, but also in other

key industry locations across Europe.

The SFNet Europe WISF program is co-led by Paula Langridge, head of UK Asset-Based Lending at Bank of America, and Alex Dunn, partner at Norton Rose Fulbright. Their leadership is expected to drive the program’s success and expand its impact across the continent.

Houston

The Houston Chapter recently held two successful events. The Women in Secured Finance group hosted a “WISF Financial Success Luncheon” on September 12 and the Houston YoPro Committee hosted an “End of Summer Happy Hour” on September 19. Both groups are growing and will continue the momentum in 2025.

Lara Baker, moderator, senior relationship strategist, PNC Private Bank, served as the moderator for the luncheon, and panelists included Austin Thomas, senior counsel, Jackson Walker, LLP and Cori Matthews, ACPRI, national insurance strategist, PNC Private Bank. The happy hour was held at The Toasted Coconut.

board is committed to putting its events in the spotlight. The Michigan Chapter promotes the opportunity to participate in networking events, which include an intimate group of 30 to 50 professionals as well as participation in programming panels. In addition to hosting events for members in the Midwest region, which attract attendees from Chicago, Cleveland, and Minneapolis-St. Paul, it also partners with other local professional organizations. The Chapter strives to offer 8 to 10 innovative events every year, with at least two events that address topics relevant to the current market and the needs of business professionals, to ensure the continued growth of the chapter.

Midwest

The Midwest Chapter’s Non-Traditional Lending Structures 101 Lunch & Learn was held at Thompson Coburn.

The Houston Chapter is pleased to announce Cassandra Mott, partner, BlankRome, as the next Chapter president. Cassandra is Houston’s first female Chapter president.

Michigan

The Chapter is delighted that the Secured Finance Network Michigan Chapter has been recognized as one of two SFNet IMPACT Awards - Chapters of the Year! The members of its board are extremely honored to receive this award. As a board, it has worked collaboratively to provide its members and community with the highest level of service and experience, and it has achieved this through the integration of sponsorships, memberships, and programming.

The Chapter Board said, “We would not be able to accomplish this without the continued support of our annual sponsors and members throughout the years. It is our pleasure to recognize all of them and thank them for their support over the years.”

To attract and retain sponsors and members, the Chapter’s

The SFNet Midwest Chapter had an exciting 2024, with over 15 events year to date, 200 plus members and 10 active committees all dedicated to promoting industry networking and education among local business professionals. Some of the highlights from this year include its Annual Golf Invitational, held on July 18 at Harborside International Golf Center, with 208 registrations and $2,171 raised for A House in Austin, a charitable organization that provides family support for young families on Chicago’s west side.

On March 7, 2024, the Chapter held an inaugural DEI Committee coffee networking hour, featuring baked goods from a local minority-owned business.

The Chapter also held several ABL 101 Lunch and Learn sessions encouraging attendance from young professionals.

On September 26, 2024, the Chapter hosted a Capital Symposium, held at Sidley Austin LLP, which consisted of two panels: ABL View from the Top, comprising Chicago ABL leadership and an Executive Panel comprised of executives from restructuring, a borrower, and a private equity panelist. The panels were followed by a presentation from Michael Gregory, CFA, Deputy Economist and Head of U.S. Economics, BMO Capital Markets, and a closing Wine Tasting reception sponsored by the Chapter’s Women’s Committee.

It’s been exciting to see so much representation from the secured finance industry including banks, specialty finance companies, consultants, attorneys, and others. In

total, over 150 companies have been represented at various events throughout the year. The Chapter is looking forward to continuing its engagement with the secured finance community through the remainder of 2024!

Northern California

The SFNet Northern California Chapter’s Annual Golf Tournament, continues to turn out well over 100 players in the commercial finance network, mainly from all over California and other Western states, but also from as far away as the mid-Atlantic and East Coast states. This year’s tournament was held June 10 at the Chardonnay Golf Club. There are fun contests for golfers, including the usual putting and drive, but also a “best hole” contest for sponsors, which Armanino LLP has consistently won with their themed full bar set up. Held in Napa, it’s an all-around great weekend in wine country.

The Chapter is also proud of starting an annual Fleet Week Watch Party event, which was on a schooner cruise around the Bay two years ago and at the Sausalito Yacht Club in 2023, on their wrap-around deck with 180-degree views of the Bay with bridge, Alcatraz, Angel Island and the airshow above while a band plays below. This year’s event was held October 10 at the Sausalito Yacht Club.

founder and EVP of sales, Stateside Vodka, and will be ending the year with the annual holiday party with TMA Philadelphia/ Wilmington. Chapter membership continues to be robust as our event planners structure event pricing on select events to include a chapter membership for the year with a paid registration. Additionally, the Chapter has welcomed two new board members this year and will be adding a third new board member in 2025. The Chapter continues to expand its reach in the lender’s and service provider’s sectors.

To join a regional SFNet Chapter, visit the chapter page under “Chapters” on SFNet.com and click on the section “Join Our Chapter”.

The Northern California’s Annual Fleet Week Watch Party Event, held at the Sausalito Yacht Club.

Eileen Wubbe is senior editor of The Secured Lender.

The Chapter has other events during the year, including Holiday and March Madness parties, but the golf tournament and Fleet Week Watch Party are its most unique and popular.

Philadelphia

The Philadelphia SFNet Chapter has been busy hosting quality events in 2024, beginning with its joint 15th Annual Philadelphia Credit & Restructuring Summit at the Union League of Philadelphia with the New York Institute of Credit, the TMA Philadelphia/Wilmington Chapter and the ABF Journal, followed by its annual Masters Networking event, which is a special precursor to the Chapter’s popular Annual Golf Outing held each May. This year marked its 29th Annual Golf Outing. The SFNet Philadelphia Chapter also hosted a new educational panel and networking event this fall with two successful Philadelphia-based entrepreneurs, Marguerite Adzick, founder and CEO, Addison Bay and Bryan Quigley, co-

Thank You 2024 Contributors

Since its inception, the Secured Finance Foundation has achieved unprecedented success and has now raised over $10.5 million. These funds are critical to SFNet’s extensive education, research and development mission. SFNet recognizes the tireless efforts of the Foundation’s Board of Directors and countless fundraising volunteers who have exceeded their goals year after year through significant contribution of time and energy to the annual campaigns.

Particular thanks go to the following organizations which have continuously supported the Foundation since its formation and whose combined contributions to the Foundation total $2,339,000.

As you grow your business and prepare your team for whatever comes next...

the Secured Finance Foundation is here to help.

Thanks to 2024 Development Chairperson, Frank Grimaldi, and his entire fundraising team for their extraordinary efforts raising $500,625 in contributions.

Corporate Campaign

Amy Barrentine, Regions Business Capital

Bobbi Acord Noland, Parker, Hudson, Rainer & Dobbs LLP

Stewart Hayes, Wells Fargo Capital Finance

Wade Kennedy, Holland & Knight LLP

Charlie Johnson

Rich Gumbrecht, Secured Finance Network

Frank Grimaldi, Gordon Brothers

Janet Jarett

Barry Bobrow, Regions Business Capital

Jennifer Palmer, JPalmer Collective

Individual Campaign

Andrea Petro, Carob Financial, LLC

Supremna Cole, Wells Fargo Capital Finance

William Bence, Wingspire Capital

Kathleen Parker, HYPERAMS, LLC

David W. Morse, Otterbourg P.C.

We unite our industry for crucial conversations, provide essential data to inform smart business decisions, attract and recognize emerging leaders, and deliver relevant, industry-speci c education programs in a variety of formats. But none of this is possible without your support.

Henry Sosa, CIT Northbridge

Lawrence Chua, Ares Management LLC

Lauren Nadeau, Gordon Brothers

Robert Grbic, White Oak Commercial Finance, LLC

Hamid Namazie, Holland & Knight LLP

Tina Capobianco, J D Factors LLC

Michael Monk, Amerisource Business Capital

Laura Glass, Bank of America, N.A.

Lawrence F. Flick, II, Blank Rome LLP

2024 Corporate Contributors

Platinum Members: $20,000-$24,999

Goldberg Kohn Ltd., Richard M. Kohn

Greenberg Traurig, LLP, David B. Kurzweil & Bethani R. Oppenheimer

Holland & Knight LLP, James C. Chadwick & Wade M. Kennedy

Otterbourg P.C., Jon Helfat & David W. Morse

Gold Members: $12,500-$19,999

Blank Rome LLP, Lawrence F. Flick, II

McGuireWoods LLP, Penny Zacharias

Morgan, Lewis & Bockius LLP, Marshall C. Stoddard, Jr. Parker, Hudson, Rainer & Dobbs LLP, C. Edward Dobbs & Bobbi Acord Noland

Skadden, Arps, Slate, Meagher & Flom LLP, Seth E. Jacobson

Thompson Coburn LLP, Leonard Lee Podair

Winston & Strawn LLP, William D. Brewer

Silver Members: $7,500-$12,499

BMO Commercial Bank ABL, Michael W. Scolaro

Buchalter, Robert S. Gillison

eCapital Corp., Marius Silvasan & Steve McDonald

JPMorgan Chase Bank, Jim Wells

Wells Fargo Capital Finance, Stewart W. Hayes

White Oak Commercial Finance, LLC, Thomas K. Otte

Bronze Members: $5,000-$7,499

Choate Hall & Stewart LLP, John Ventola

CIT, Michael G. Hudgens

Gordon Brothers, Frank Grimaldi

Hilco Global, Gary C. Epstein

MidCap Business Credit, LLC, Steven Samson & William J. Black

PKF Clear Thinking, Stuart Kessler

SLR Business Credit, Jeffrey K. Goldrich

Truist Securities, Ricardo Simon

Benefactors: $2,500-$4,999

Apple Bank, Burt M. Feinberg

BDO USA, P.A, Baker A. Smith

Chapman and Cutler LLP, Daniel Baker

CIBC, Bruce Denby

Dwight Funding, Daniel Basloe

Encore Funding, LLC, Joel Adelman

FTI Consulting, Sean Harding

J D Factors LLC, Matthew Johnson

Knight & Associates, LLC, Tim Knight

KPMG LLP, Andrea Pipitone Beirne

Latham & Watkins, LLP, Jennifer B. Ezring

MidCap Financial Services, LLC, Bradley S. Kastner

Phoenix Management a part of J. S. Held, Michael Jacoby

Regions Business Capital, Courtney Jeans & Amy Barrentine

SG Credit Partners, Charlie Perer

Siena Lending Group, David Grende

Southeastern Commercial Finance, a Renasant Bank Company, Patrick B. Trammell

The Sharkey Family Fund at

The Chicago Community Foundation, Michael D. Sharkey

Valley National Business Capital, John M. DePledge

Webster Business Credit, Abby Parsonnet

Patrons: $1,000-$2,499

1STWEST Background Due Diligence, Sue Bury

Access Capital, Inc., Terry M. Keating

AeroFund Financial, Inc., Stephen K. Troy

Amerisource Business Capital, Michael Monk

Ares Management LLC, Ryan Cascade

Axiom Bank, N.A., Michael D. Haddad

Buchanan Ingersoll & Rooney PC, Sean M. Girdwood

Capital Foundry, LLC, John Fox

Celtic Capital Corporation, Mark A. Hafner

Cost Reduction Solutions, Denise Albanese

Eclipse Business Capital, Martin Battaglia

Edge Capital, Meredith Leigh Carter

EisnerAmper, Robert Katz and Craig Mann

Entrepreneur Growth Capital, LLC, Dean I. Landis

Focus Management Group, J. Tim Pruban

Haversine Funding LLC, Stan Vukmer

Hovde Group, LLC, Tim Stute

Legacy Corporate Lending LLC, Clark Dexter Griffith

M&T Bank, Albert Spada

McMillan LLP, Jeff Rogers

Moritt Hock & Hamroff LLP, Marc Hamroff

Mountain Ridge Capital, Craig Winslow

Oxford Commercial Finance, Robyn Barrett

SFNet Atlanta Chapter, Joe Massaroni

TD Bank, Joseph F. Nemia

The Keystone Group, Danielle Miller

Tiger Capital Group, Michael McGrail

United Community Bank, Caleb McFaddin

Vion Investments, Stacey Schacter

Members: Up To $999

ABLSoft Inc., Nancy Lee

Bank of America Business Capital, Seth Benefield

Bank of America Business Capital, Laura Glass

Cash Flow Resources, LLC, Kevin Laborde

Jabez Group, LLC, Kevin Adams

King Trade Capital, Edward P. King

RSS Robert S. Sandler, LLC, Robert S. Sandler

SLR Credit Solutions, Cheryl Carner

2024 Individual Contributors

Individual - Foundation Fellow: $10,000 - $19,999

Robert Katz, CTP, CPA, MBA, EisnerAmper, inHonor&MemoryofMartinI.Katz

Foundation Benefactor: $5,000 - $9,999

Barry Bobrow, Regions Business Capital

Lawrence F. Flick, II, Blank Rome LLP

Jeffrey K. Goldrich, SLR Business Credit

Richard Gumbrecht, Secured Finance Network

Stewart W. Hayes, Wells Fargo Capital Finance

Jonathan N. Helfat, Otterbourg P.C.

Wade M. Kennedy, Holland & Knight LLP

Richard M. Kohn, Goldberg Kohn Ltd.

Robert Meyers, Republic Business Credit

Michael Monk, Amerisource Business Capital

David W. Morse, Otterbourg P.C.

Bobbi Acord Noland, Parker, Hudson, Rainer & Dobbs LLP

Bethani R. Oppenheimer, Greenberg Traurig, LLP

Jennifer Palmer, JPalmer Collective

Andrea L. Petro, Carob Financial, LLC

Foundation Patron $2,500-$4,999

Joe Accardi

William D. Brewer, Winston & Strawn LLP

Tina Capobianco, J D Factors LLC

John M. DePledge, Valley National Business Capital

C. Edward Dobbs, Parker, Hudson, Rainer & Dobbs LLP

Ian Fredericks, Hilco Global

Betty Hernandez, SLR Business Credit

Charles & Jane Johnson, Secured Finance Foundation

Doug Jung, Hilco Global

Jordan M. Klein, Winston & Strawn LLP

Lawrence A. Marsiello

Michael W. Scolaro, BMO Commercial Bank ABL

Michael D. Sharkey, The Sharkey Family Fund at The Chicago Community Foundation

Friend of the Foundation: $1,500-$2,499

Kelechi Adibe, Sidley Austin LLP

Raffi Azadian, Change Capital

William R. Bence, Wingspire Capital

Bruce Denby, CIBC

Leonard Lee Podair, Thompson Coburn LLP

Peter York, Ohio State University

Member of the Foundation $500-$1,499

Amy Barrentine, Regions Business Capital

Elizabeth Buckley, Alston & Bird LLP

Miin Chen, Siena Lending Group

Lawrence Chua, Ares Management LLC

Supremna Cole, Wells Fargo Capital Finance

Ellen T. Cook, Alter Domus

Daniel Ennis, Parker, Hudson, Rainer & Dobbs LLP

Robert P. Grbic, White Oak Commercial Finance, LLC

Kevin Harbour, Oxford Finance LLC

Janet Z. Jarrett

Matthew Johnson, J D Factors LLC

Terry M. Keating, Access Capital, Inc.

Aliah Lalani, Hilco Global

Donald B. Lewis, Eastern Bank

Nneoma A. Maduike, Holland & Knight LLP

Lauren Nadeau, Gordon Brothers

Hamid R. Namazie, Holland & Knight LLP

Kathleen Parker, HYPERAMS, LLC

Greg Slowik, Secured Finance Network

Henry Sosa, CIT Northbridge

William A. Stapel, Fifth Third Bank

Foundation Donor Up to $499

Seth Benefield, Bank of America Business Capital

Tom Boniface, Hilco Global

Bryan Courcier, Hilco Global

Joe Creel, Truist

Laura Kemper Glass, Bank of America, N.A.

Dan Goll, CIT

Siham Haddad, J D Factors LLC

Ezra Hedaya, Hedaya Capital

Betty Hernandez, SLR Business Credit, InHonorofValerieMason,Esq.

David and Sandra Kagen, Kagen Family Charitable Fund

Tammy Kemp, Garrington Financial Corp.

Jonathan Leopold, Single Point Capital

Alexander McKeown, Hilco Global

Adam Moss, Bank of America Business Capital

Michael Parisi, Alston & Bird LLP

David Phillips, Far West Capital

Jason Schumacher, Valley National Business Capital

Mignon Winston, Great Rock Capital

Special Acknowledgment

Thank you to the Katz Family who support the SFFound Guest Lecture Program through the Martin I. Katz Guest Lecture Scholarship. This scholarship helps to lessen financial stressors, mitigate monetary disenfranchisement, and bring diverse talent to the secured finance industry.

Secured Finance Foundation: Helping to Shape the Future

The Secured Finance Foundation (SFFound) encourages, facilitates, and supports education, innovation, and charitable works for the betterment of organizations and professionals who deliver and enable secured finance—and for the communities of which they are a part. Below are just a few of SFFound’s impactful initiatives:

Guest Lecture Program

• Connects finance industry leaders with students on college campuses

• Provides insights into secured finance careers through lectures from 276 member companies

• Offers access to internships, scholarships, and networking opportunities

Mentoring Program

• Links seasoned professionals with newcomers for learning and growth

• Bi-weekly virtual activities and one-on-one meetings

• Mentees gain skills and network, while mentors give back and shape the industry’s future

SFNet Professional Development Courses

• Live-online and in-person courses led by industry experts

• Courses feature practical case studies to help professionals make an impact

• Four free on-demand series in appraisals, factoring, legal issues, and bankruptcies for members

Secured Finance Certified Professional (SFCP) Program

• Prestigious certification in asset-based lending and factoring

• Sets a gold standard for professionals through a comprehensive curriculum and rigorous exam

• Helps organizations attract and retain top talent by focusing on employee development and best practices

To learn more about these initiatives, please contact Denise Castagna at dcastagna@sfnet.com.

CELEBRATING EXCELLENCE

Honoring SFNet HOF Inductees and IMPACT Award Recipients

It is my great pleasure to introduce you to the remarkable individuals and organizations we are honoring in this issue of The Secured Lender

On the following pages, you will find the profiles of our esteemed 2024 SFNet Hall of Fame inductees and the recipients of our inaugural SFNet IMPACT Awards. These exceptional leaders and innovators represent the very best of our industry, and their contributions have defined and are still shaping the landscape of secured finance as we know it today

Our Hall of Fame inductees are true industry icons who have left an indelible mark on secured finance. While they come from differing backgrounds and specialties within our field, each has made critical contributions that have elevated our industry and strengthened our association. We owe them a profound debt of gratitude for their visionary leadership and unwavering commitment to excellence.

This year, we are also proud to introduce the SFNet IMPACT Awards, a new initiative celebrating excellence across various facets of the secured finance industry. The IMPACT Awards embody the core values and achievements that our community strives to uphold: Innovation, Market Leadership, Performance, Achievement, Customer Focus, and Teamwork. These awards recognize individuals and organizations that have demonstrated exceptional talent, hard work, and creativity, not just for the benefit of their own businesses, but for the advancement of the industry as a whole.

As you peruse the profiles of our award recipients, you will undoubtedly be struck by the depth of talent and ingenuity on display. From seasoned executives to emerging leaders, these individuals and teams have shown remarkable dedication to pushing the boundaries of what’s possible in secured finance.

The Transactions of the Year category showcase deals that have made a significant impact from the borrower’s perspective, highlighting innovation and collaboration. Our Leadership in DEI award celebrates those championing diversity, equity, and inclusion in the field of secured finance. The Chapters of the Year and Volunteers of the Year awards recognize the vital contributions of those who work tirelessly to strengthen our community and advance SFNet’s mission.

Lastly, the Innovator of the Year award spotlights those developing groundbreaking solutions to industry challenges.

These awards are more than just accolades; they are a testament to the vibrant, forward-thinking community that makes up the Secured Finance Network. They reflect our collective commitment to excellence, innovation, and the continuous improvement of our profession.

As we celebrate these achievements, let us also look to the future with renewed enthusiasm and determination. The profiles you are about to read serve as an inspiration for all of us to strive for greatness and to continue pushing the boundaries of what’s possible in secured finance.

Congratulations to all our honorees, and thank you for your invaluable contributions to our industry and association.

How did you get your start in the industry?

Robert Grbic is the senior advisor of White Oak Commercial Finance, LLC. Mr. Grbic has more than 40 years of commercial lending experience. He has been with the company and its predecessor since 2005, previously serving as president & CEO, as well as senior executive vice president and chief credit officer where he was involved in creating a hands-on, best-practices credit culture, and helped the Company expand its client portfolio. Before that, Mr. Grbic was managing director at Morris Anderson & Associates LTD, a turnaround-consulting firm. He also co-founded MetSource Capital, LLC, a restructuring and corporate finance firm, working primarily with small- and medium-sized companies. In addition, he also held management positions at GMAC Commercial Credit, LLC, BNY Financial Corp and Bankers Trust. Mr. Grbic served as the chairman of the Secured Finance Network’s Factoring Committee for three years, from 2022 through 2024. He is a regular moderator and panelist at SFNet, IFA, and NYIC events. He served as an instructor for the Finance, Tax and Law Department at the NYU School of Continuing Education. Mr. Grbic holds master’s and bachelor’s degrees in business administration from Pace University.

In 1979, in need of a job to pay for my BBA in accounting, I took a full-time job as a collector at Collins and Aikman while I completed my degree at night. With my accounting background I was quickly promoted to credit analyst. In 1982, with my degree in hand, I was hired by Bankers Trust, and shortly thereafter I started a nighttime MBA program. As it turned out, the job I took to help start a career in accounting turned into a career in lending thanks to many mentors who gave me the time and the opportunities to succeed.

What advice would you offer to someone just starting out in the industry?

Understand that you are starting down a road to a career, not a job. A career is a long-term endeavor, entails continuous learning, networking, and accumulation of experiences that, when put into practice, not only makes you a respected lender, but also a leader in your craft.

Ask the same question to many of your mentors to learn every angle of a concept or issue. Avail yourself of the educational webinars and conferences offered by organizations such as the SFNet. Watch and listen to how others deal with opportunities and, more importantly, problems. As one of my first mentors at Bankers Trust told me, “No one is born a lender.”

Strive to stay informed on current trends and events. Lenders today need to be more focused on borrower business models. With rapid developments and enhancements in technologies and markets in a growing global economy, traditional business models are being displaced, leading to unexpected impairment of collateral and cash flows.

Lastly, take pride and promote our industry. Credit is the catalyst for economic growth, innovation, and the creation of wealth. We are often the lenders to start ups, “fallen angels” and growth stories that have become today’s market leaders.

What are some of the most memorable moments of your career?

Being part of the ownership group that purchased Capital Business Credit from Regions Bank in 2005, where I was first exposed to having direct responsibility in managing every aspect of a lending business, including having to manage both sides of a lender’s balance sheet.

What professional achievement are you most proud of?

Certainly, being honored by your peers with the SFNet Lifetime Achievement Award is very special and one of the highlights of my career. Like many business leaders, I would add that successfully navigating the unchartered waters created by the pandemic in 2020 was an achievement, one that I hope we never experience again.

I am very proud to have worked with Tom Otte and the rest of White Oak Commercial Finance’s (White Oak) senior management team in my role as president and CEO of White Oak in expanding our product offerings and ABL book.

I would also add that mentoring some of today’s future leaders over my career, many of whom work for White Oak Commercial Finance, has also been very rewarding.

What role did SFNet, its events, connections, etc. play in your career development?

Over the course of many decades, the SFNet has provided educational and networking opportunities to broaden my career. Just as important, it has provided me with the opportunity to give back to our industry by being on various panels over the years, and as the chair of the Factoring Committee and a member of the Membership Committee.

ROBERT GRBIC
White Oak Commercial Finance, LLC

CONGRATULATES

Robert P. Grbic

Senior

White Oak Commercial Finance

Congratulations to Bob Grbic on receiving the SFNet Hall of Fame Lifetime Achievement Award!

Bob’s remarkable contributions to the secured finance industry, including his impactful tenure at White Oak Commercial Finance, have earned him this prestigious honor. His dedication and leadership have left a lasting legacy in the industry.

whiteoaksf.com/commercialfinance | info@whiteoakcf.com

MILTON P. KUPFER

The following is the nomination letter written by SFNet past chairs Steve Bakke and Charlie Johnson for Milton P. Kupfer.

“To some of you here today, Milton P. Kupfer is just another name, since he left us in 1958. He was a giant of a man, both physically and intellectually. Milton was to a large degree responsible for the formation of this Conference, and was General Counsel from its inception until his untimely death in 1958. He was recognized nationally as the undisputed authority on Commercial Finance Law, and it was entirely logical that this honor be named the Milton P. Kupfer Award.”

— From the 1964 Annual Convention

That introduction was spoken by Herbert A. Busch, President of the Northern Financial Corporation. It was part of announcing the winner of the Milton P. Kupfer Award, an essay competition open to employees of member companies who had attended an industry seminar during the prior year. The first Kupfer award had been presented at the 1959 convention. The award winner received “a check of $100 and an appropriate scroll.” The award was presented continuously for almost 50 years.

It’s amazing how Kupfer’s voice can still be heard after so many years. An internet search readily displays the volume of his legal speaking and writing, especially regarding bankruptcy law. His was a time of much activity “harmonizing” commercial transaction law. That activity would lead to the Uniform Commercial Code, first published in 1952.

Other things you would learn from that research would include the

fact that after Kupfer’s death, his widow Alys endowed a scholarship at the Columbia Law School in New York City, his alma mater. You would also find examples of correspondence with individuals such as James Forrestal, America’s first Secretary of Defense. Curious researchers might also find his speeches and articles interesting and even entertaining.

We reviewed the detailed transcripts of several annual conventions, and of course the one that stands out is the first convention of the National Conference of Accounts Receivables Companies at the Waldorf Astoria Hotel in New York city, on November 19, 1945.

Milton Kupfer worked with our industry before it was an industry. He was a giant of his profession and of the industry as well. We thank him for giving our industry a push……a chance to become what it is today.

We nominate Milton P. Kupfer for admission to the Hall of Fame as a “Pioneer of the Industry.”

Thank you to our SFNet 80th Annual Convention Sponsors & Exhibitors

DIAMOND PLUS LE VEL
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BRONZE LE VEL
EXECUTIVE LE VEL
EXHIBITOR LE VEL
DIAMOND LE VEL
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Bobbi Acord Noland is a partner at Parker, Hudson, Rainer & Dobbs LLP in Atlanta, Georgia and leads the Commercial Finance practice. She guides global, national and regional lenders through complex domestic and cross-border transactions. Bobbi has over 30 years of extensive experience in commercial lending and also advises clients on workouts and restructurings.

Bobbi is a Fellow of the American College of Commercial Finance Attorneys, is recognized in Band 1 of Chambers USA and has been listed in Best Lawyers in America for 17 years. Bobbi serves as co-general counsel for the Secured Finance Network and has taught as an adjunct professor at Emory University Law School. She is a past chair of the Business Law Section and UCC Committee of the Georgia State Bar, and the Business and Finance Section of the Atlanta Bar. Bobbi is a 1986 Phi Beta Kappa graduate of Wake Forest University. She graduated from Wake Forest Law School in 1989 and served as editor-in-chief of the Wake Forest Law Review.

How did you get your start in the industry?

I began my legal career at King & Spalding in Atlanta in the commercial finance area, and became intrigued by the complexity of the deals and the business aspects of this type of practice. Over 30 years ago, I joined Parker, Hudson, Rainer & Dobbs, and I continue to find my practice as engaging as ever. Each new deal energizes me, from structuring and analyzing issues to exploring different businesses and industries. I particularly enjoy the opportunity to interact with a diverse range of people who all work together to achieve a common goal. These elements have kept my work interesting and fulfilling throughout my career, and I know that they will continue to do so.

What are some of the most memorable moments of your career?

When I became a partner at Parker, Hudson, Rainer & Dobbs in 1997, I was so honored to join a partnership that valued collaboration, merit and excellence. Many of my memorable moments also include SFNet, and I am proud to have been a part of this organization that gives back so much to the secured finance industry. One of the most important milestones for me was becoming SFNet’s first female co-general counsel. Being recognized by The Secured Lender as one of the top “50 Women in Commercial Finance” was also memorable.

Finally, being inducted into the SFNet Hall of Fame is the highlight of my career. I feel grateful for all of the relationships that I have made over the years and proud of the many ways that I advised and served our clients to achieve their business goals. I look forward to continuing to work with our clients on transactions and advise on interesting legal issues while furthering the mission of SFNet for the future.

What professional achievement are you most proud of?

I have been blessed with many wonderful opportunities in my career. I was honored to be inducted into the American College of Commercial Finance Attorneys in 2007, which is such a distinguished group of attorneys who I have always admired and respected. I also love serving as the co-general counsel of SFNet with Jon Helfat. My role as co-general counsel has helped me understand our industry better, meet new people and give back in a different way. I also have been honored to serve as the Commercial Finance Practice Group Leader at our firm for almost ten years. Every week I work with my other partners and our entire team to guide the practice and provide excellent service and value to our clients. I could not be prouder of what the team has achieved for our clients and am excited about our collaboration for many years to come.

BOBBI ACORD NOLAND
Parker, Hudson, Rainer & Dobbs LLP

We celebrate Bobbi and all the inductees recognized for their contributions to the secured finance industry. We are proud to call Bobbi our colleague and friend. Secured Finance Network’s Hall of Fame 2024 inductee

Bobbi Acord Noland Congratulations to

As head of the Commercial Finance practice, Bobbi guides global banks, regional banks and finance companies through secured loan transactions, and frequently advises her clients on workouts and restructurings.

Mike has served as managing director and group head of Asset Based Lending at BMO since November 2007. Prior to joining BMO, Mike held management positions at RBS Business Capital, Bank of America Business Capital, Heller Business Credit and CIT Business Credit.

Mike has held various positions on civic and charitable boards, including HFS Chicago Scholars, and has served three terms as a Village Trustee in his community of Northbrook, IL. Mike has also served on the Secured Finance Network Board, the Secured Finance Foundation Board, the Turnaround Management Association Board and the Association for Corporate Growth Chicago Board. He is a past president of the Secured Finance Network Midwest Chapter and most recently was the Police and Fire Commissioner in Northbrook, IL.

Mike has an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University and a BBA in finance from the University of Notre Dame. He lives in suburban Chicago with his wife, Barb, and his golden retriever, Dakota. He is the father of three adult daughters and a proud grandfather of three.

How did you get your start in the industry?

In 1986, I answered a want ad in the Wall Street Journal for a business development representative in Manufacturers Hanover Commercial Corporation’s Chicago office. I am pretty sure I replaced another SFNet Hall of Fame member, Mike Sharkey, who had moved on to Standard Charter! I was fortunate to learn from many of the industry greats throughout my career, including Phil Strauss, Joe Pollicino, Larry Marsiello, Irwin Teich, Manny Darmanin, Jim Connolly and Dan Landers. I like to think I have taken the best of all of them to help mold my leadership style.

What advice would you offer to someone just starting out in the industry?

Ask questions. The nuances of Asset Based Lending are fairly significant. Amongst other things, we deal with aged receivables, bad debt expense, dilution, reconciliations, appraisals, grower liens, concentrations, offsets, rebates, allowances, royalties, extended terms, appraisals, etc…. No one is expected to come into ABL with a complete knowledge of collateral issues.

Be patient. Be aware. And get things done. Senior leaders are trying to identify the team players who are “all in” and capable of operating independently. The easiest way to get known as somebody who gets things done is to take on projects big and small and finish them efficiently. You will become a person known for getting things done and ever bigger projects will come your way.

Read everything, even the boring parts.

Show up ready to work. Read the Wall Street Journal. Be on time. Get to the office every day you can (yes, even Fridays).

Speak up and give your opinion. When asked a question on a deal, give your thoughts and be prepared to defend them.

Build relationships. I keep in touch with hundreds of colleagues, customers, referral sources and old friends. It is good for the soul, but can also lead to business.

Be active in your community.

Control what you can.

Enjoy the ride, it goes by quickly.

What are some of the most memorable moments of your career?

I closed my first deal in 1987. I had no idea what I was doing, but my mentors helped me navigate a process I knew nothing about. And 37 years later, I count my first customer as one of my closest friends.

I have been on the wrong end of a couple of frauds. They hurt. A lot. But you learn more from your mistakes than your successes.

Being named group manager of the BMO ABL team was a red letter day. I was afforded the opportunity to implement a strategy designed to build BMO into a leading ABL team. I was fortunate to be able to attract a great team with a shared vision.

What professional achievement are you most proud of?

I am fairly analytical, so I focus on measurables. In 17 years, BMO ABL has maintained a 20+% CAGR, a world-class employee engagement Index, a leading net promoter score and a 100% participation in the annual United Way Giving Campaign. I am most proud to be part of a growing organization that cares for both its employees and customers while being surrounded by generous colleagues.

What role did SFNet, its events, connections, etc. play in your career development?

In the late 1980s, SFNet created a three-year Leadership Program at Wharton. The program was designed to identify future leaders of the industry and create a cohort who could advance through the industry together. I was fortunate to attend with the likes of Mike Ehlert, Bruce Sprenger, Bill Hall, Peter Thompson and Andrea Petro, amongst others. It was a great opportunity to meet other mid-career professionals who would later serve as sounding boards and teammates

The SFNet Michigan Chapter was founded in May 2012 by Jeff Wright, who is still an active board member and chair of the chapter sponsorship committee.

In the past year, the SFNet Michigan Chapter has experienced an exciting period of growth. The Chapter has been working diligently to get sponsors and members excited about networking opportunities since the pandemic occurred. The Chapter has worked collaboratively in recent years to increase engagement by integrating sponsorships, memberships, and programming so that everyone can benefit. This strategy has proven to be very successful. There has been a significant increase in sponsorship commitments as well as membership numbers, both of which have reached record levels. In addition, many of the Chapter’s events are experiencing record attendance.

To ensure the continued growth of the Chapter, it strives to offer innovative events every year. The Chapter promotes the opportunity to participate in networking events which include an intimate group of 30 to 50 professionals as well as participation in programming panels. In addition to hosting events for members of the Midwest region, which attract attendees from Chicago, Cleveland, and Minneapolis-St. Paul, the Chapter also partners with other local professional organizations.

As part of its membership drive in 2023, the Program Committee and Membership Committee joined forces and established a new goal to host 8 to 10 events annually.

Two or three educational events, six social events, and the Sponsor Appreciation Reception are what they strive to organize to accomplish this goal.

For educational programming, the Chapter organizes at least two events each year that address topics relevant to the current market and to the needs of business professionals. The events serve as a wonderful opportunity to promote the Chapter and to introduce potential new members to the organization. The Chapter has organized a variety of educational events over the years. In June of 2024, the Chapter hosted a timely panel discussion titled “The Private Equity Marketplace: Current Trends and How to Maximize Value,” which was attended by more than 60 people. This September the Chapter hosted its Second Annual Roundtable Discussions aimed at helping younger professionals and recognizing the 16 new chapter members.

noted in the description and agenda on the invitations. Throughout the year, the Chapter also host several social events during which many guests remain well after the event concludes.

During the first half of this year, the Chapter held four social events, including the Pistons game with TMA Detroit, attended by more than 50 people, the Post Holiday Party, attended by more than 70 people, March Madness with ACG Detroit and RMA East Michigan, attended by more than 215 people, and the first Masters Watch Party, attended by more than 30 people.

Before a fall kick-off event, Michigan board members are hard at work strategizing for the upcoming year.

The Chapter is also involved in charitable projects. Over the years, the most meaningful charitable contribution has been following the unexpected passing of the Chapter’s former Chapter Administrator, Sharon Kimble. Sharon made a tremendous impact on the Detroit business community over the course of her 25-year career managing and supporting professional networking associations. In honor of Sharon’s legacy, a 529 fund has been established for her grandchildren’s college fund, and the board voted to make a donation to this fund since the board members knew that sponsors would be very supportive of this decision. In their next board meeting, members will discuss future charitable contributions.

At all events, the Chapter emphasizes the networking opportunities available to everyone who attends. The panel discussions include ample networking time prior to and following the program, and this is

Chapter vice president Robert Bowles held two guest lectures for students at Wayne State University as part of the Martin I. Katz Guest Lecture Scholarship offered by national SFNet. In total, he reached approximately 50 students through the two opportunities.

The present iteration of the SFNet New York Chapter dates back to August 30th, 2005. The current Chapter Board is most proud of the support exhibited by the New York area secured finance community. Due to the effects of the COVID pandemic, 2023 active membership stood at only 150 when the year began. Today, membership has nearly doubled to 286 active members. Michael Ticehurst (Rosenberg and Fecci Consulting), SFNet NY Chapter president, decided to boldly push the boundaries in every direction: increasing events, upgrading venues, reaching out more to young professionals and garnering greater commitments from Chapter sponsors. He also expanded the Board to help execute on his aggressive agenda, which included himself, Heidi Ames (SLR Business Credit), Chapter vice president; Tom Siska (eCapital), treasurer; Craig Mann (Eisner Advisory Group, LLC), secretary; Paul Shur (Becker & Poliakoff ), Education chair; and Howard Moore (First Citizens), chairperson.

The Chapter really started hitting its stride when Heidi Ames transitioned the holiday party to a new venue, increasing attendance and greatly improving the overall experience. In 2024, the Board started an annual sponsorship level, which was a huge success, allowing the NY Chapter to include comp spots for both regular members and YoPros, which helped drive membership. The Chapter also expanded the social events to include a Yankee Game in a suite, complete with a surprise visit by Brian Cashman, general manager of the Yankees, who stopped by to converse and take photos with all of the attendees. Another new event was an NFL weekday evening game complete with a pregame tailgating party.

Mann and Shur worked to expand the yearly educational events to three, using the Chapter’s Sponsor Vendors to supply timely and relevant content, from field exam, appraisal and liquidation firms to turnaround and distressed debt experts. Mann also greatly enhanced the Chapter’s social media presence.

attendees. The bulk of the attendees were YoPros. With the addition of the annual sponsorships, these YoPro events can be offered at reduced pricing to YoPro members. A second YoPro event was held in June and was another sellout.

NY Chapter Executive Board at the Jets/ Patriots game and networking event held jointly with the SFNet NJ Chapter.

Finally, with our increase in membership and sponsorships, combined with financial & administrative support from SFNet National, the NY Chapter was able to increase its community involvement. At last year’s annual holiday party, all registered attendees donated a toy for children in need while the Chapter made an additional cash donation. The Chapter also embarked on a public relations initiative to expose the secured finance industry to young talent in our area. The Chapter presented guest lecture programs at Rider University, Baruch College and Lehman University.

The Chapter added a Young Professional Committee run entirely by YoPros, with Jeff Austin (SLR Digital Finance) heading it up. In February, the YoPro Committee put together a Brooklyn Nets game geared for YoPros which started out with a minimum of 27 and quickly grew to a sold-out event with 65

And the high water mark was the establishment of the Paul H. Shur Merit Scholarship program, which allowed members to nominate existing and soon-to-be college students who had an interest in potentially beginning a career in the financial services industry. The first two $2,500 scholarships were awarded to the winners in July of 2024. The Chapter leaders thank all of the NY Chapter members and look forward to building on this momentum as we enter 2025!

VINCENT J. ROLDAN

Mandelbaum Barrett PC

Vincent J. Roldan is a partner at Mandelbaum Barrett PC and is licensed to practice in New York and New Jersey. He is a member of the firm’s Bankruptcy and Creditors Rights, and Banking and Financial Services groups. He has represented parties in interest in various aspects of bankruptcy proceedings and out of court workouts across the U.S. including secured lenders, chapter 11 debtors, asset purchasers, noteholders, trade creditors, landlords, creditor committees, and trustees. He is a frequent speaker and published writer with respect to secured lending, restructuring, commercial bankruptcy and distressed investing.

Mr. Roldan served as a law clerk to the Honorable Lewis M. Killian, Jr., United States Bankruptcy Judge for the Northern District of Florida. Mr. Roldan received his B.A. from the University of Michigan and his J.D. from Benjamin N. Cardozo School of Law.

Mr. Roldan currently serves on the boards of two organizations (Asian Pacific American Lawyers Association of New Jersey and Secured Finance Network) and served for two years on the board of the National Asian Pacific American Bar Association. He is also a past president of the Filipino American Lawyers Association of New York; a founding member of the National Filipino American Lawyers Association; and a member of the Asian American Bar Association of New York, for whom he founded the Bankruptcy and Restructuring committee. He received the New Jersey Law Journal’s Diverse Attorney of the Year Award in 2023.

What has motivated you to get involved in DEI initiatives?

I care deeply about inclusion and mentoring. I knew very few Asian Pacific Americans (APAs) when I was in law school, and after graduation, I did not know of any APA partners. It is unfortunate that APAs are not well represented in the partner ranks at large law firms or the judiciary. This lack of representation extends to the restructuring community as well. Witnessing this gap firsthand motivated me to take an active role in advocating for greater inclusion, mentorship, and networking opportunities for young APA professionals.

Which accomplishments in DEI are you most proud of?

Because there are historically few APA attorneys in the field of restructuring, I sought to help provide APAs with networking and mentoring by co-founding the Corporate Bankruptcy & Restructuring Committee for the Asian American Bar Association New York (AABANY) in 2013. AABANY is one of the most prominent and active minority bar associations in New York with over 1,800 members.

I am also a proud Filipino American and am a founding member of two Filipino bar associations- the National Filipino American Lawyers Association (NFALA) and the Filipino American Lawyers Association of New York (FALA NY). I served as a Board member for NFALA for five years and am a past President of FALA NY. Both organizations are growing and thriving.

I’m ultimately proud to have contributed to providing APA professionals with the resources and connections they need to thrive in the legal field.

What would you say to others to encourage their involvement in similar initiatives?

My goal as an attorney is to solve problems and make things easy for my clients; similarly, I try to help provide resources to younger APAs that did not exist early in my career. I would say, giving back to the APA community has been rewarding and I look forward to continuing to do so. In addition, I am happy to say that many of the lasting friendships I have made during my legal career can be directly traced back to my involvement with various APA organizations.

Andrea is a partner at KPMG LLP in the Deal Advisory and Strategy Practice. Andrea provides due diligence assistance and structured finance consulting services to clients in the financial services industry. Andrea has over 31 years of experience, including more than 22 years with KPMG, and nine years with Arthur Andersen LLP’s Transaction Advisory and Assurance Practices.

Andrea has 27 years of financial due diligence experience which includes analyzing and modeling structured finance transactions, evaluating assetbased, asset-backed, and cash-flow debt structures, and assisting acquirers in financial, cost saving and synergy analysis. Andrea has diverse, practical experience in manufacturing, aviation, distribution, healthcare, retail and service segments. From a cross-border perspective, Andrea has extensive experience with structuring deals with international components.

In addition to providing due diligence consulting services, Andrea has extensive experience with Regulation AB attest engagements, and other assetbacked securities transaction related agreed-upon procedures.

Andrea has worked with clients across the financial services sector, including commercial banks and finance companies, direct lenders, hedge funds, asset-backed securities issuers, primary and master servicers, and trustee organizations.

Please tell us how your first became involved with neurodiversity. Neurodiversity is defined by Oxford dictionary as, “the range of differences in individual brain function and behavioral traits, regarded as part of normal variation in the human population.” We know from experience that people who are neurodivergent with traits such as Autism, ADHD and Dyslexia think differently about topics. They have different strengths, perspectives and weaknesses. We also know even though they often get the same college degrees and are as proficient as – and in many areas often more skilled than - the ‘typical’ person, many are underemployed. The reason I became involved in furthering KPMG efforts to employ and retain neurodivergent talent was first, it is the right thing to do and secondly, it makes our organization stronger by having diversity of thought to solve the challenges our clients come to KPMG to solve, and harnessing some of the skills that we need for our future growth.

Please tell us about the programs you have created/helped to launch at KPMG to attract and retain neurodiverse team members.

We started with a small grass roots committee in Chicago over 8 years ago and now it is one of the major KPMG initiatives both for our Diversity, Equity and Inclusion group and our firm’s Abilities In Motion business resource group. As part of my work on the neurodiversity initiative, we worked with our recruiting group and the National DEI group to develop a program around interviewing, on-boarding, training and retaining neurodiverse talent. We have also developed training for the Firm that educates KPMG professionals on what it means to be neurodivergent- in the first six months of launch, almost 8,000 of our colleagues have taken this training of their own accord. What we have found, in many instances, is that these changes are better for the processes for all recruits and employees.

In collaboration with our campus recruiting group, we have educated our recruiters at schools where we heavily recruit to discuss career opportunities with all neurotypical and neurodivergent students. We

have introduced our campus recruiters to the champions at the universities for neurodiverse talent. I worked with these champions at the universities to start a University Council that is made up of over 60+ universities from across the country. This group assists students with not only being successful in college but also with identifying compatible employers.

I have also intentionally worked, together with other senior neurotypical leaders involved in this work, to identify talented neurodivergent leaders in the firm and ensure they have opportunities to step up and drive this forward – ‘nothing about us without us’.

What I am most proud of is that this education and focus on neurodiversity has created not only a great program for those new joiners to KPMG, but it has also created an environment where existing employees are speaking up and willing to be vulnerable by selfidentifying as neurodivergent or be a mentor to other neurodivergent colleagues or being an ally and wanting to understand more.

What advice would you offer to others in the industry who would like to start a similar initiative, but may not have the resources of a large company?

My suggestion is to start small, get help from others who have paved this road already, do it right from the beginning and if you have neurodivergent colleagues, listen to them on what works and what does not. They are your best resource because they know your organization and they know what works for them. The first step is learning from an organization that has already implemented a program to understand the best practices for each phase of the hiring, retaining and promoting that an employee goes through during their tenure. An organization can ruin their chances of having a successful program if they bring neurodivergent professionals in before the organization is prepared. Remember that what works for one person may not work for another. Be flexible with accommodations, work environments and provide a lot of education for everyone in the organization.

ANDREA BEIRNE KPMG LLP

Novo Advisors Borrower: Kimco

In the spring of 2022, Kimco, a major player in the commercial cleaning industry, was successfully sold to KBS, a strategic buyer backed by Cerberus, in an all-stock transaction. This deal not only resulted in full repayment of all outstanding debt, but also ensured that equity holders were made whole. But behind this successful outcome lies a complex story of Novo Advisors’ strategic thinking, quick decision-making, and a determined effort to save a company teetering on the edge of bankruptcy.

Backstory

Kimco’s troubles began in 2014 when Compass, a leading company in the industry, decided to spin out its janitorial business. The buyers—Kimco’s CEO, COO, and CFO—who previously managed a smaller regional platform, suddenly found themselves at the helm of a national operation generating $175 million in sales. The acquisition, while promising, presented an immediate challenge: the need to build a robust back-office function from scratch. This included crucial departments such as Accounts Payable (AP), Accounts Receivable (AR), Human Resources (HR), Sales, and IT.

Unfortunately, the leadership team lacked experience in managing such a large-scale acquisition. Their inexperience, coupled with growing financial challenges, led to the development of an ill-equipped back-office. By design or by neglect, this inefficiency masked deeper issues, including the possibility of fraud. As a result, Kimco’s financial performance plummeted, and by 2016, the company was losing $5 million in EBITDA and facing severe liquidity challenges.

Enter Novo Advisors: A Strategic Turnaround Begins

By the time Novo Advisors was brought in, Kimco was in dire straits. The company was in default with its senior lender, Fifth Third Bank, unable to service interest or preferred dividends on its subordinated debt and preferred equity. The ownership structure was particularly unique, with the sponsor, Alaris Equity, holding Preferred Units but not controlling the common shares. The common shares were held by the CEO, COO, CFO, and CCO, who also made up the Board of Directors.

Novo quickly realized the gravity of the situation. Accounts payable had ballooned to $14.4 million, Alaris had suspended its $4.5 million annual preferred dividend payments, and the company was inching closer to bankruptcy. Novo also suspected the officers of malfeasance. Novo’s initial efforts were focused on showing that a path to success was still possible. Their approach was twofold: stabilizing the company’s finances and restructuring its leadership. Novo also recommended that the board be reconstituted so the capital holders had better control of the company.

Novo’s decision to reconstitute the Board proved vital when, in December 2016, the then-CEO attempted to initiate a bankruptcy filing. With the support of the COO (who was also his brother), the CEO sent a Board resolution authorizing the bankruptcy to the CCO for a final signature. However, the CCO, wary of the implications, refused to sign and immediately forwarded the resolution to Novo. Recognizing the

potential disaster this could bring, Novo advised Alaris to terminate the CEO and COO immediately.

A Strategic Exit: The Path to a Successful Sale

With the leadership crisis averted, Novo shifted its focus to developing a turnaround plan for Kimco. They successfully identified a refinance partner for the revolver, and Alaris stepped in to refinance Fifth Third’s subordinated debt. This move provided the necessary liquidity to stabilize the business and set the stage for a potential sale.

Novo’s efforts culminated in the spring of 2022, when Kimco was sold to KBS in an all-stock transaction. The deal not only ensured the repayment of all outstanding debts but also safeguarded the interests of all stakeholders, including the Class B, C, and D Unit holders.

Preserving Jobs and Promoting Diversity

One of the most significant impacts of Novo’s turnaround efforts was the preservation of thousands of jobs. Kimco employed approximately 4,500 people, plus an additional 1,000 subcontractors, all of whom were able to retain their positions thanks to the turnaround. Novo also played a crucial role in fostering a workplace culture that supported diversity, equity, and inclusion. The company hired a diverse mix of talent, including a 50/50 blend of male and female employees, with the majority being African American or Hispanic. This strategic hiring not only strengthened the company’s operations, but also set a positive example for the industry.

Conclusion: A Case Study in Strategic Turnaround

“Kimco is an example of how Novo’s years of experience, strategic thinking and decisive action can turn around a company on the brink of collapse,” said Sandeep Gupta, Managing Partner of Novo Advisors and CEO during the turnaround. “We’re grateful for the recognition from SFNet, which highlights our commitment to and capability with restructurings and turnarounds - congratulations to our team whose expertise made this achievement possible.”

Special thanks to Mike Ragano, Partner at Novo and interim COO during the turnaround, and Jacob Grall, Managing Director at Novo and Director of FP&A, for their pivotal roles in operations and support. Novo Advisors and our clients are fortunate to have such committed and skilled leaders. Thank you to Alaris Equity Partners, Kimco’s financial sponsor, for their patience and commitment in supporting Kimco’s turnaround strategy.

February 11-12, 2025

Encore at the Wynn Las Vegas, NV #SFNetABCC25

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Get the latest market insights from top industry leaders, engage in dynamic discussions on the economy and industry trends, and expand your network with key decision-makers.

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Wells Fargo Capital Finance Borrower: RONA inc.

Wells Fargo Capital Finance served as the Administrative Agent and Left Lead Arranger for a C$1.65 billion asset-based revolving credit facility to RONA inc., which supported Sycamore Partners’ acquisition of the company in 2023. The transaction required a lender with retail ABL expertise to successfully underwrite, syndicate and execute on a cross-border transaction.

RONA inc. is a leading nationwide retailer and distributor of hardware, building materials, and home renovation products with more than 450 corporate and affiliate dealer stores across Canada. With a long and rich history, RONA inc. has supported Canadians in their home improvement and construction projects since 1939.

The company was acquired by Lowe’s Companies, Inc. (Lowe’s) in 2016 as part of Lowe’s expansion into the Canadian home improvement market, which it first entered in 2006. After years of operating their Canadian business under the Lowe’s and RONA’s brands, Lowe’s decided to divest their Canadian business.

Rising to the top as the likely acquirer of RONA as a standalone company was Sycamore Partners, a NY-based private equity firm. Founded in 2011, Sycamore specializes in control buyouts, growth capital and capital solutions investments in the consumer, retail and distribution sectors.

As one of the most active investors in the space and with significant investments in Canadian businesses, Sycamore wanted to partner with a financial institution that had strong capabilities in structuring and syndicating large retail facilities and could move quickly to not only provide committed financing, but also to successfully syndicate the transaction.

Wells Fargo has been a trusted banking institution for Sycamore for years based on its agility, flexibility, and the ability to execute. Wells Fargo is also a leader in the assetbased lending industry, with a deep sector expertise based upon an extensive record of retail transactions closed over several decades. Additionally, as an established commercial lender in Canada, Wells Fargo has continued to expand its capabilities and presence cross-border to assist U.S.-based clients with their financial needs.

Acquisitions can be complicated when involving entities that are being spun-off and divested, and certainty of financing is critical to ensuring success. To help Sycamore navigate this

process, Wells Fargo was able to maximize the facility size while providing market terms that supported Sycamore’s goals. The team further differentiated itself with the willingness to provide a 100% underwritten commitment for the transaction, including a FILO tranche to allow Sycamore certainty in execution as they pursued the opportunity.

Additionally, Wells Fargo demonstrated its leadership in the syndicated asset-based market through its knowledge of and ability to collaborate with other financial institutions, which led to a successful syndication, and allowed Sycamore to execute on their acquisition of RONA with confidence. Wells Fargo continues to be a leader in asset-based lending across North America, supporting middle market and corporate companies across various sectors with commitments ranging from $10.0 million to more than $2.0 billion. Wells Fargo’s expertise in asset-based lending and the syndications market gives clients the confidence that they are working with a team that can execute quickly to support M&A, working capital needs, distributions, and capital investments.

Great leaders inspire us

Wells Fargo Capital Finance proudly recognizes our outstanding team for their efforts in supporting our client, Sycamore Partners, with their acquisition of Rona. We are honored to be an inaugural recipient of the SFNET Impact Award for Transaction of the Year.

Congratulations to:

Adam Davis

Allison Prosser

Cole Buckfelder

Cory Loftus

Lynn Whitmore

Michael McClanahan

Wai Cheng

LAURA JAKUBOWSKI Goldberg Kohn

Please tell us about your career trajectory.

Laura Jakubowski is director of Knowledge Management and Innovation with Goldberg Kohn. She leads the firm’s knowledge and data management strategy, and provides legal, technical, market and practical expertise for the firm’s Commercial Finance and Bankruptcy practices. Laura is the 2025 chair of the SFNet Advocacy Committee and serves on the Executive Committee.

Laura rejoined Goldberg Kohn in her current position in August 2021. Prior to that, she was an Assistant General Counsel at a large financial institution where she focused on middle-market lending and digital, data use and privacy law matters for its commercial banking group. Previously she was a Commercial Finance Associate at Goldberg Kohn.

I began my career as a commercial finance attorney at truly the best and worst of times, in the summer of 2007. The financial crisis that exploded shortly after that in 2008 was a frightening time for just about everyone in the world, and in particular for junior folks in finance who were learning a new subject matter and forging their career paths at a time when it felt like the world would never be the same. At the same time, helping to navigate financial institution clients through the tumult turned out to be the most effective way to learn about what is really important in lending transactions, and to really appreciate the key role that the loan markets play in the global economy. The experience made me who I am as a lawyer and shaped the rest of my career.

How did you get involved with the SFNet Advocacy Committee?

My involvement with the Advocacy Committee began with volunteering for a project to prepare a comment letter on the proposed U.S. regulations to implement the Basel III international banking regulatory framework. As noted, my career as a finance lawyer was shaped during the global financial crisis of 2007-2009. I subsequently spent a number of years in the internal legal department of a bank, and these two experiences gave me both an appreciation for the importance of prudent regulations, but also the need for those regulations to be sensible, purposeful, and to give financial institutions flexibility in their much-needed role of providing credit to drive business and the U.S. economy. Working on the Basel III comments gave me an opportunity to listen to concerns from financial institutions, as well as convey those concerns to regulatory agencies and have a dialogue with the

agencies to get a better understanding of the intention behind the regulations - and to bridge the gap between them.

You are taking on the role of chair of SFNet’s Advocacy Committee for the fiscal year 2025. What advice would you offer to SFNet members about why they should become more engaged in advocacy?

While organizing information for the Basel III comment process, it became clear to me that, especially with a somewhat niche product like ABL lending, there is a great deal of misinformation about how the product works, how important it is, and how safe it is. Lawmakers and regulatory agency staff by necessity must have broad knowledge and often lack deep expertise on nuanced products or topics. When it comes to asset-based lending, we, as SFNet members, are the experts, and it is important for us to share that expertise in order to help develop sensible regulations that are suited for the purposes our country, states and communities are trying to accomplish. It is also important to keep in mind that, outside of headline-grabbing federal regulations, states are often implementing new laws and regulations that have a broad reach in financial markets – and we need interested folks to dig into state-level activity as well. There are many ways to get involved, and it is so important that we collaborate and share our collective expertise and insights on asset-based lending.

Laura Jakubowski

SFNet Inaugural IMPACT Award

Recipient

Recipients embody the core values and achievements that the SFNet community strives to uphold and promote

Valerie S. Mason is a member of Otterbourg P.C.’s Banking and Finance department and chair of its Lender Finance practice group. She advises some of the nation’s largest financial institutions, commercial finance companies, and hedge funds, in the structuring and restructuring of financing transactions, including revolving credit facilities and term loans for acquisitions, refinancings, and restructurings and general working capital needs, lender finance transactions, Chapter 11 debtor-in-possession and “exit” financing facilities and other secured lending transactions. In the Lender Finance practice area Valerie has represented both lenders and borrowers.

In addition to her law practice, Valerie is an active member of SFNet’s Women in Secured Finance Committee. For more than 25 years, she has been involved in criminal justice reform, through her service as the past president and a current member of the Board of Directors of the Women’s Prison Association & Home, Inc., now serving as chair of the Development Committee, and a member of the Audit Committee. In November 2023, while attending the SFNet Annual Convention, she was elected and currently serves as the chairperson of Manhattan Community Board 8, which encompasses the Upper East Side of Manhattan and Roosevelt Island. In 2017 she was named a “Woman of Distinction” by the New York State Assembly, and in 2019 received an “OTTY” from Straus News for her community advocacy.

Tell us about your career trajectory and why you were drawn to secured finance law.

I began my career at Otterbourg as a summer associate, sampled the many practice areas, but what drew me to secured finance was that I enjoyed the team work, the transactional nature of the practice and the people who were my clients. Back then it was really only commercial finance companies in the ABL space; I liked the combination of a codebased law practice that was transactional and the practice of secured finance law offered it all.

How did you first get involved with SFNet’s Women in Secured Finance Committee and why did you want to dedicate your time to this initiative?

Not sure how it all came about actually, but having been a part of this industry and all too often up until mid-way into my career, being the only woman in the room or on the phone, frankly it was exciting and fun to finally have a growing network of women to talk to about what they were experiencing; WISF offered the opportunity in a relaxed atmosphere.

What aspects of your involvement have been the most rewarding and why?

The planning of the annual WISF Conference has been the most rewarding. Being a part of the smaller group facilitates getting to know your colleagues outside the confines of the deal matrix. There’s pressure to put on a great program, but a different kind than when you are working on a deal, and it is equally as satisfying when it all comes together with 200-plus in attendance. We have gone from worrying whether anyone

would show up to turning attendees away due to occupancy constraints. I’m so happy that my career has lasted long enough to work with so many talented women; it is both motivating and validating.

What advice would you offer to SFNet members about why they should be engaged in SFNet?

The positive aspects of engagement are limitless, from increasing your substantive knowledge about your industry, to developing long-term relationships, both professional and personal, with a great group of humans. Who knew being a member of SFNet would lead to a tennis podcast with Barry Bobrow, you just never know!

VALERIE S. MASON

Mignon has over 30 years of lending experience and is currently an underwriting team leader at Great Rock Capital. Prior to joining GRC, she served as a managing director of underwriting at White Oak Commercial Finance, where she managed the approval and closing of new business transactions for its assetbased lending and factoring portfolios. Prior to that, Mignon held underwriting, credit administration, and portfolio management roles at Sterling National Bank, First Capital, Wells Fargo, CIT, and Heller Financial. Early in her career, she received formal credit training at Chemical Bank, now JP Morgan.

Mignon received her B.A. from Harvard University and her M.B.A. from New York University. She routinely mentors and trains junior people in the finance industry. She conducts alumni admissions interviews for Harvard University. Mignon belongs to the Turnaround Management Association and the Secured Finance Network, where she serves on its Education Committee. Mignon was thrilled to receive SFNet’s Henry H. Chen Award for Educator of the Year in 2023.

Originally from Boston, Mignon resides in Brooklyn, NY, and she is an avid tennis player and fan.

Tell us about your career trajectory and why you were drawn to secured finance.

I spent my first nine years at a major money center bank doing middle-market cash flow lending. I loved the rigor of middlemarket lending vs. lending to Fortune 500 companies. I loved being important to a mid-sized borrower’s business. During my time with this bank, I realized that I preferred the credit side of the lending business over the relationship management or origination sides: I really like “geeking out” over determining middle-market borrower creditworthiness. I then sought out roles which were more credit intensive, and that ultimately led me to join Heller Financial as a senior underwriter in its factoring group, which was my start in secured finance. I have enjoyed working in the alternative lending space, first at White Oak Commercial Finance and most recently, at Great Rock Capital.

How did you first get involved with the SFNet Education Committee, and why did you want to dedicate your time to this initiative?

I started getting involved with the SFNet sometime during my tenure with First Capital, which stretched from 2011-2015. As I recall, I started by pitching an idea to teach an underwriting webinar, and it was then suggested that I join the Education Committee.

Joining the committee has allowed me to teach, develop curricula, form friendships with fellow committee members, and promote the association’s efforts to educate its members. I have especially enjoyed recruiting other industry thought leaders to teach courses for the SFNet and join its Education Committee. But the ability to teach lending concepts is what resonates with me the most.

What aspects of your involvement have been the most rewarding and why?

For sure, the most rewarding time during my role as an Education Committee Member is what I call “that click,” when I perceive that a student has caught on to a concept that I’m trying to explain while teaching a seminar.

What advice would you offer to SFNet members about why they should become more engaged?

I would recommend strongly that SFNet members consider becoming more engaged with the organization, in a role that resonates with them. It is a great way to meet your colleagues across the industry, form friendships, and confer with them on banking, commercial finance, and lending issues. Harkening back to question #1, it provides another way to “geek out” in an area that interests you and that you’re good at! In terms of career building, serving as an active committee member is a great way to become regarded as a thought leader in the industry and raises one’s stature. If you’re working at the right company, your employer will recognize your SFNet contributions as spreading its name across the industry in a positive way. Lastly, being active in the SFNet enhances one’s career-building and networking activities, which we can’t do enough of!

MIGNON WINSTON Great Rock Capital

ABLSoft, Inc. #10

Nancy Lee, CEO

Nove

1350 Old Bayshore Hwy., Suite 520 Burlingame, CA 94010

Phone: 866-632-7146

Email: nlee@ablsoft.com www.ablsoft.com

ABLSoft is the premier solution in asset-based lending and factoring portfolio management. Designed from the ground up in the cloud, ABLSoft continues to push innovation forward, delivering advanced automation, user-friendly interfaces, and tailored service for lenders. Its powerful, flexible platform adapts to various lending structures, while modern tools elevate the borrower experience. Whether you’re a large financial institution or a growing independent lender, trust ABLSoft’s customer-centric approach to streamline operations and drive profitable growth. To learn more or request a demo, visit www.ablsoft.com.

1

Accounts Receivable Inc. (ARI Global), #15

Parker Freedman, President 1311 N Westshore Blvd. Tampa, FL 33607

Phone: 813-288-8680

Email: parker@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.

Allianz Trade, #1

Bernadette Leano, Event Coordinator

100 International Drive, 22nd Floor Baltimore, MD 21202

Phone: 917-306-8556

Email: Bernadette.Leano@amer.allianz-trade.com Web: www.allianz-trade.com/en_US

We predict trade and credit risk today, so companies can have confidence in tomorrow.

Allianz Trade is the global leader in trade credit insurance and a recognized specialist in the areas of surety, collections, structured trade credit and political risk. Our proprietary intelligence network analyzes daily changes in +80 million corporates solvency. We give companies the confidence to trade by securing their payments. We compensate your company in the event of a bad debt, but more importantly, we help you avoid bad debt in the first place. Whenever we provide trade credit insurance or other finance solutions, our priority is predictive protection. But, when the unexpected arrives, our AA credit rating means we have the resources, backed by Allianz to provide compensation to maintain your business. Headquartered in Paris, Allianz Trade is present in 52 countries with 5,500 employees. In 2022, our consolidated turnover was 3.3 billion and insured global business transactions represented 1,057 billion in exposure.

Change Capital #20

Raffi Azadian, CEO

600 Madison Ave., 18th Floor New York, NY 10022

Phone: 646-434-0900

Email: raffi@change.capital www.change.capital

Change Capital lends, invests, and gives to businesses and initiatives with a preference to align itself with those that provide socially impactful, responsible, sustainable, and highly innovative and disruptive products and services.

SFNet’s 80th Annual Convention

November 13-15, 2024 | Marriott Marquis Houston | Houston, TX

CODIX

#17

Billy Quinn, Managing Director

Claudia Perri, Sales Director

1230 Peachtree St. NE, Suite 1900 PMB 208 Atlanta, GA 30309

Phone: 404-790-0998

Email: bquinn@codix.us; cperri@codix.eu www.codix.us

CODIX is a global software provider for commercial finance, asset finance, trade credit insurance, and debt collections. Its iMX solution has been trusted by major financial institutions, incl. leading banks, world-class credit management organizations, large multinational retail and wholesaling corporations, large telecoms, and global auto-finance groups.

All-in-one System, iMX offers full coverage of market products, including: Factoring (traditional, reverse, international, transportation), Purchase Order Finance, Invoice Discounting (ID), ABL, Inventory Finance, Supply Chain Finance, Credit Insurance, Loans, Leasing, Consumer Finance, AR, Collections and Legal, Syndications and more. iMX handles the entire life cycle from presales to finance, accounting, and bad debt management. The software ensures a simplified & paperless onboarding and customer experience across all products via a user-friendly self-service online portal. Customizable for local needs, iMX allows tailored product strategies, workflows, pricing, collections, and accounting with quick time-to-market. On-premise or SaaS cloud, it supports multi-branding, multi-entity, multi-product, multi-currency, multi-language, and multiledger operations, reducing costs and enhancing global risk monitoring. iMX includes the native integration of all the tools needed to improve global productivity, such as SMS, telephony, document management and BI, and it provides APIs and standard solutions for integration and interoperability. With its cutting-edge Expert System, iMX automates even the most complex workflows, boosting efficiency and productivity. The software is currently used in 28 languages by more than 50,000 users in 50 countries. CODIX is ISO 9001:2015 and ISO 27001:2022 certified.

CSC #14

Paul Schultz, Vice President/Financial Sales 251 Little Falls Dr. Wilmington, DE 19808

Phone: 800-927-9801 x62670

Email: paul.schultz@cscglobal.com www.cscglobal.com

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 trusted partner for 90% of the Fortune 500®, nearly 10,000 law firms, and more than 3,000 financial organizations.

Headquartered in Wilmington, Delaware 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.

Cync Software #18

Lydia Taylor, Director of Sales

3505 E Frontage Rd., Suite #160 Tampa, FL 34695

Phone: 727-538-2250 x311

Email: ltaylor@cyncsoftware.com www.cyncsoftware.com

Cync Software is committed to “Supercharging Your Lending Automation” by seamlessly integrating artificial intelligence and cutting-edge cloud technologies with premier lending solutions based on best practices. Under the Cync Product Suite, we have five applications: Cync ABL, Cync Factoring, Cync Syndication, Cync Spreading, and Cync LOS. Our dedication to revolutionizing the lending processes with relentless research and user-centric design transforms the way data is captured and decisions are made—launching a new era of intelligent analysis and efficiency for lenders.

Decipher Credit #3

Paula Claro, Marketing & Communications Director 10411 Motor City Drive, Suite 750 Bethesda, MD, 20817

Phone: 301-798-9778

Email: paula@deciphercredit.com www.deciphercredit.com

Decipher is an origination and underwriting platform designed to streamline ABL lending. Decipher has the latest technology with Open Banking, Automated Receivables and Payables Aging Analysis, Inventory Aging Analysis, Automated Financials Spreading, AI-Gen Credit Memo Automation, Customized Risk Scorecards, Covenants management and a sophisticated Borrower Credit Portal to move prospects quickly from origination to approval with less risk. Our end-to-end cloud-based system with APIs is a game-changer for Banks and ABL lenders looking to increase efficiencies and modernize their lending process.

FGI #11

Augusta Melendez, Associate Director 410 Park Ave., Suite 920 New York, NY 10022

Phone: 212-248-3400

Email: amelendez@fgiww.com www.fgiww.com

FGI is a global leader in the commercial finance industry, equipping small and medium enterprises with the tools they need to enhance their business. Through its three principal business units, FGI Finance, FGI Risk, and FGI Tech, FGI provides clients with flexible and customized asset-based lending and credit insurance solutions designed to support international and domestic growth. T.R.U.S.T.™, FGI’s flagship software, is a powerful web-based credit insurance management platform that automates the management and administration of credit insurance policies in real-time. Headquartered in New York City with offices across the U.S., Canada, Mexico and the UK, FGI delivers unique and relationshipfocused solutions for its clients worldwide.

Flatbay Capital, #9

Elliot Smith, Managing Partner

3 Sugar Creek Center Blvd., Suite 625

Sugar Land, TX 77478

Phone: 832-248-6176

Email: es@flatbaycapital.com www.flatbaycapital.com

Flatbay Capital LLC is a Texas-based non-bank lender focused on owner-occupied commercial real estate loans - priced between “bank money” and “hard money.” When operating companies need an alternative to traditional bank financing that calls for creative deal structuring, no covenants, and competitive rates, Flatbay Capital could be the answer. Our typical client is a good company that’s going through a rough patch, but they have a plan and just need a little help. Our bridge loans can refi bank debt (to buy more time), provide cashout (with sufficient equity), or finance an acquisition of commercial real estate. Visit www.flatbaycapital.com for more information.

IBISWorld #4

Kurt Salter, Senior Relationship Manager

One World Trade Center, 285 Fulton Street, 56th Floor

New York, NY 10007

Phone: 917-267-0304

Email: kurtis.salter@ibisworld.com www.ibisworld.com

IBISWorld provides trusted industry research on thousands of industries worldwide. Our in-house analysts leverage economic, demographic and market data, then add analytical and forward-looking insight, to help organizations of all types make better business decisions.

SFNet’s 80th Annual Convention

November 13-15, 2024 | Marriott Marquis Houston | Houston, TX

Lendscape #12

Lenore Gibson, Head of Marketing

735 Tank Farm Road, Suite 185

San Luis Obispo, CA 93401

Phone: 805-544-5821

Email: lenore.gibson@lendscape.com www.lendscape.com

Lendscape is the world’s leading technology provider for all forms of secured finance.

With over 45 years of experience and in-depth industry understanding, our dynamic team has designed, developed, and delivered secured lending technology to over 40 markets and some of the worlds’ most prestigious banking and financial services providers.

Lendscape supports a range of solutions such as assetbased lending, factoring, invoice discounting, as well as asset finance and many other forms of specialist finance.

Platinum Filings LLC #16

Steven Friedman, President 99 West Hawthorne Ave., Suite 408 Valley Stream, NY 11580

Phone: 718-705-9886

Email: stevenfriedman@platinumfilings.com www.platinumfilings.com

Platinum Filings helps your deals close quicker and smoother. We are a global service provider of due diligence, compliance and business forensics services. We serve leading law firms, lenders, private equity and financial institutions with high-quality work product, client-tailored services, innovation and unmatched turnaround times. We are experts in UCC/Lien research and delivering our results with industry disrupting speed. We harness leading technology and artificial intelligence to deliver a unique experience that combines speed and accuracy.

The Platinum Advantage

A few items to keep in mind that differentiate Platinum Filings from other service companies: Our unmatched level of personalized customer service

We are lightning quick with unmatched speed and turnaround abilities.

Thoroughness. We are experts in searching and filing nationwide–and we know each jurisdictions nuance and make sure everything is covered and clear.

Competitive pricing

Easy billing. What we quote is what you pay–so everything is always organized and efficient on your

end for closing. We send an invoice together with the results on every order and can also send monthly spreadsheets of all invoices.

QX LOGISTIX #19

Christopher Carey, Jr.

President, QX Logistix

Phone: 323-364-7232

c2@qxlogistix.com

www.qxlogistix.com

QX LOGISTIX provides a complete collateral management program for Lenders to protect their inventory asset base. As a full-service third-party logistics provider, QX will store your borrowers’ inventory, process orders, and fulfill ecommerce and shipping needs, while providing assurance to the Lender as to the viability and value of their inventory.

Registered Agent Solutions, Inc. A Lexitas Company #8

Katherine Orton, Marketing Manager 5301 Southwest Pkwy., Suite 400 Austin, TX 78735

Phone: 888-705-7274

Email: korton@rasi.com www.rasi.com

Registered Agent Solutions, Inc. (RASi) is an innovative leader in the Registered Agent and transactional service industry. Since 2002, RASi has provided quality corporate services to organizations small and large throughout the United States and internationally.

With over 100 years collectively, RASi’s staff is comprised of hardworking individuals with extensive corporate knowledge and experience. RASi’s renowned customer service, constant development of useful client applications, and commitment to competitive pricing makes it apparent why RASi has become one of the fastest growing Registered Agent providers in the industry.

Even through rapid growth over the years, our core founding values have remained intact. At RASi, we strive to provide consistent and personalized service through the delivery of quality solutions which most often exceed our clients’ expectations. Unlike other companies,

RASi does not increase our rates year after year. That’s another reason our clients can trust that they will receive the best value for Registered Agent services.

RelPro #2

Lance Rosenthal, Chief Customer Officer

51 JFK Pkwy., 1st Fl. West Short Hills, NJ 07078

Phone: 908-770-2063

Email: lrosenthal@relpro.com www.relpro.com

RelPro’s Business Development solution is used by 50% of the Top 50 U.S. Banks (and leading Regional & NonBank firms) to grow their business and increase sales efficiency. RelPro delivers unparalleled quality coverage of private companies & their decision-makers, with accurate contact details and an ease-of-use that enables Business Development professionals to quickly identify new prospects, qualify leads, prepare for calls and close deals faster. RelPro’s UCC, Buyer Intent and other loan filing data provide valuable intelligence for Asset-Based lenders and marketers seeking to identify companies and ABL opportunities.

RelPro integrates 20+ data sources including UCC & CRE filings, SBA loans, MBE/DBE Certifications, Medical Practices, Government Contracts, Executive Wealth Insights, and Buyer Intent data - and connects seamlessly with leading CRM and Industry Research platforms. Contact us for a demo.

information service focuses on delivering timely equipment metrics with accuracy and reliability unmatched by anyone else in the industry.

Siena Lending Group #7

Miin Chen, COO

9 W Broad Street, Suite 450 Stamford, CT 06902

Phone: 203-883-5668

Email: mchen@sienalending.com www.sienalending.com

Siena Lending Group is a leading asset-based lender providing financing solutions from $10 to $100 million across the United States and Canada. Siena operates across most industry sectors and has a team of specialists within the Healthcare industry. Siena provides senior secured solutions to privately held middle-market companies and publicly traded industry leaders and has earned a reputation as a trusted financing partner to private equity firms and other financial sponsors. Since 2012, Siena has consistently found creative ways to provide borrowers with maximum flexibility and liquidity. With deep lending experience and expertise in complex situations, clients know Siena brings the patience and perspective to help them work through challenges and achieve their long-term visions.

Rouse Services #6

Raffi Aharonian, Managing Director 8383 Wilshire Boulevard Beverly Hills, CA 90211

Email: raffi.aharonian@rouseservices.com

Phone: 310-363-7525 www.rouseservices.com

Rouse is the leader in construction equipment market intelligence. In decades of service exclusively to the construction equipment industry, Rouse Services has built a legacy of deep expertise, unrivaled data precision, and unparalleled customer service. Today, Rouse is the gold standard for appraisals, used equipment sales support, and rental metrics benchmarking for customers throughout the United States, Canada and the United Kingdom. Rouse’s

Siena is a portfolio company of Franklin BSP Capital Corporation, an affiliate of Benefit Street Partners L.L.C. (“BSP”). BSP, a leading credit-focused alternative asset management firm, is a wholly-owned subsidiary of Franklin Resources, Inc.

SFNet’s 80th Annual Convention

November 13-15, 2024 | Marriott Marquis Houston | Houston, TX

Solifi #5

Rosanne Doyle, Global Head of ABL and Factoring, Product Management

TractorWorks Building

800 Washington Ave. N, Suite 901 Minneapolis, MN 55401

Phone: 201-965-6513

Email: rdoyle@solifi.com www.solifi.com

Solifi is a leading global organization delivering a solid financial technology foundation for automotive and asset finance firms. Our mission is to reshape finance technology by bringing together proven solutions into a singular powerful technology platform designed to help you protect and scale your business. Leading banks, captives and independent finance organizations are futureproofing their business and capitalizing on new opportunities using Solifi Open Finance Platform, through a range of products for originations, portfolio management, and lease and loan pricing.

Our latest product for asset funders, ESG Portfolio Strategist, is a multi-tenant SaaS application, which aims to solve the key considerations automotive funders have in addressing ESG. Encompassing a wide range of functionality focused on operationalizing ESG within your existing leasing workflow, ESG Portfolio Strategist can ensure you’re one step closer to achieving Net Zero.

With Solifi Open Finance Platform, you can: Enjoy automated upgrades for access to the newest features and capabilities;

Enrich your data and improve the capabilities of your software with our trusted integration partners; Utilize powerful reporting tools and identify trends and potential risk with ease; Only ever pay for the features that you use with our trusted SaaS solutions; Drive growth with a scalable platform built to last.

Thomson Reuters #13

Hannah Marion, Central and Southern CA – Risk Specialist 610 Opperman Drive Eagan, MN 55123

Phone: 651-417-4672

Email: hannah.marion@thomsonreuters.com https://www.thomsonreuters.com/en.html

Minimizing risk throughout your organization is foundational to its lasting growth and vital reputation. From identity verification and risk assessment as you onboard your business relationships, to the continuous evaluation and investigation of revealed concerns within those relationships, it is mission critical to cover the needs across all your risk-based review requirements. Thomson Reuters Risk & Fraud Solutions brings together unparalleled content and related expertise with the industry-leading breadth and depth of its data, and AI-powered analytics, to help solve some of the most pressing challenges throughout your entire workflow.

XEN #21

Alexander Kayfetz-Gaum, Vice President, Operations 600 Madison Ave. New York, NY 10022

Phone: 1-888-212-4434

Email: alexander@xenplatforms.com www.xenplatforms.com

XEN is on a mission to help lenders work smarter, not harder. Our modern and powerful white-label loan management software helps lenders and factoring providers seamlessly manage their prospects, clients, capital and collateral, all in one place. With a multiplatform approach, XEN streamlines, accelerates, and automates any stage of the financing life cycle. From originating prospects, to underwriting and contracting, to ongoing servicing and monitoring. Schedule a demo to experience modern lending with XEN.

LITIGATION RISKS INSIGHTS

Something Commercial Lenders Can Learn From Consumer Lenders

Jeff Wurst of Armstrong Teasdale explores the critical role of arbitration in commercial lending, offering lenders a strategic approach to mitigate litigation risks and maintain confidentiality. Discover how effective arbitration clauses can safeguard your interests and streamline dispute resolution.

Lenders regularly say that there are only two good days in the life of a loan: the day it closes and funds, and the day it’s paid off. Everything else is work. That said, the day-to-day work of administering a loan, reviewing borrowing base certificates, making advances, and assuring that the borrower is in good stead is what the lender bargained for when it made the loan. But that part of loan administration that lenders never bargained for is collecting out a loan after it has gone bad. Workouts may be stressful, but litigation is something beyond that. No lender wants to spend good money after bad trying to collect out a loan and defend itself against claims - usually unfounded - of a lender’s alleged misconduct. Defending itself in court is one thing where it is assumed that rational minds will prevail. However, defending itself in court also means that it is defending itself in a public forum, often with press coverage, which means that it is defending itself against emotion and not reason.

It is worse for consumer lenders where they are more prone to having to defend themselves against class actions. As a result, consumer lenders learned to turn to arbitration and to restrict such arbitrations to single claimants. Arbitration, coupled with a waiver of class action, can provide comfort to the consumer lender. Consumer claimants continue to bring their claims in arbitration, and where warranted, arbitrators grant awards in favor of consumers. But when that happens the lender is generally spared the negative publicity that often follows such results.

Critics of arbitration may call this forced arbitration, but it is anything but forced. Despite claims to the contrary, consumer arbitration clauses tend to be in bold face or otherwise highlighted in the agreement. In addition, consumers are given a period of time to opt out of arbitration - even after the loan has closed and funded. It is noteworthy that consumers are not given the option to opt out of any other provisions of the loan, such as the obligation to repay the money borrowed.

But because of bad press about consumer lenders (some

of which may have been well-deserved), as well as pressure from critics such as the Consumer Financial Protection Bureau and various state attorneys general concerning forced arbitration and other complaints, consumer lenders allow a borrower to rescind the arbitration provision during a reasonable period following the closing and funding of the consumer loan.

A. WURST

So, what can commercial lenders learn from this?

First, recognize that there is a significant difference between consumer borrowers and commercial borrowers, who are presumed to have the requisite knowledge and experience (including access to legal advice) to knowingly enter into a loan agreement containing a mandatory arbitration provision. As a result, arbitration provisions contained in a commercial loan are not prone to the type of criticism of their counterparts in consumer loan agreements.

That is not to say that a prospective borrower will not push back on a mandatory arbitration provision contained in a loan agreement just as it may push back on any other loan provision. The negotiations of the loan agreement will result in whether the arbitration provision, or any other provision for that matter, will remain in the executed loan agreement or be modified in some way.

So why arbitration and not litigation?

Those of us who have been engaged in lawsuits concerning a commercial loan know that it can often turn into a rabbit hole. Yes, a typical collection case, an action to recover on a note or a guaranty action, will typically be resolved by a motion for summary judgment on the pleadings. But even these cases can take a long time to work their way through the court system.

Consider what happens to these ordinary course cases when the borrower alleges bad acts by the lender and a court sustains those claims denying the motion for summary judgment. The lender is then faced with a costly litigation, including open-ended discovery – document production, including electronic discovery; depositions; experts; discovery motions; pre-trial memorandums; trial testimony; and post-trial briefs. And then come the appeals.

Ka-ching! Document production, electronic discovery (ouch) and depositions comprise the greatest expense of a litigation.

And all (or most) of this is contained in public records and offer fodder to reporters looking for anything hot that will get the attention of their readers and viewers.

JEFFREY
Armstrong Teasdale LLP

Lenders may consider avoiding (or at least mitigating) all of this by replacing their typical litigation clause with an arbitration clause. If the Lender wishes to retain the right to bring its action in a state or federal court, it may reserve that right while it requires arbitration for any action brought against the Lender. Typically an arbitration clause will provide that the proceedings and results be kept confidential. That can save the Lender from the bad press that results from rare (but painful) instances when borrowers prevail on their claim of a lender’s bad acts.

Keep in mind the benefit of confidentiality. Even when the lender is successful in a court decision and succeeds in obtaining an order dismissing lender bad-act claims, the story is out there and bad press results even from such a successful decision.

How do you invoke arbitration?

Arbitration begins with the loan agreement. Remove the litigation jurisdiction sections and replace them with a comprehensive arbitration clause. In drafting an arbitration provision, you can limit those things that run up the cost of a litigation. Yes, the parties must pay for the arbitration, but those costs are easily mitigated by scaling down the extent of those things that run up costs and make litigation so expensive. And you can require a timetable that puts the arbitration on a shorter schedule than you would get in court. Of course, your arbitration clause will contain a confidentiality provision that would bar any negative ruling from finding its way to a court –and the press.

You can also provide for a “documents only” arbitration, whereby there will be no hearing – just an exchange of briefs and exhibits. You may wish to include a fast-track provision where there is minimal or no discovery (absent for good cause shown to the arbitrator) and where the hearing, if any, and the decision are locked into a strict schedule.

The perception that arbitration is more costly than litigation is a fallacy, although at first blush it may appear to be because the arbitrator gets paid much more that the filing fees for a typical lawsuit. But considering the time and expense of lender’s legal counsel, an arbitration can pay for itself by keeping the case on track and by preventing runaway costs. And, of course, the arbitration clause may provide that the borrower pays, as litigation provisions impose the costs on the borrower.

There are many tools available to assist one with drafting an arbitration clause such as AAA ClauseBuilder. ClauseBuilder and similar drafting tools takes you through all the necessary elements of a proper clause and explains why each element is important.

There are many tools available to assist one with drafting an arbitration clause such as AAA ClauseBuilder. ClauseBuilder and similar drafting tools takes you through all the necessary elements of a proper clause and explains why each element is important.

Your arbitration clause can include such things as selecting the arbitration administrator (e.g. AAA, JAMS, etc.), the venue for the arbitration, the number of arbitrators (typically one for smaller cases and three for larger cases), the experience of the arbitrator, the method of selection of the arbitrator, limitations on discovery, variations from the standard rules of the administrator.

Cross-border loans have long been subject to arbitration for the resolution of disputes, where choice of law and the location for hearing might otherwise be chaotic. The Loan Syndication and Trading Association model loan agreements for crossborder loans contain arbitration provisions in place of the litigation provisions that you might see in its domestic forms.

With more and more lenders tipping their toes into arbitration and recognizing its benefits, this is a roadmap to the future of dispute resolutions in commercial finance. The time has come to take that next step.

Jeffrey A. Wurst is a partner in the New York office of Armstrong Teasdale, an Am Law 200 firm with offices throughout the United States. He is a Regent of the American College of Commercial Finance Lawyers and a nationally recognized speaker and author on topics of interest to secured lenders. He can be reached at jwurst@atllp.com.

ACCOUNTS

WORKOUT TRENDS

The Secured Finance Professional’s Guide to Managing Accounts Receivable Financing Workouts: Best Practices and Cost-Effective Strategies

Joseph Heim of Culain Capital outlines how secured finance professionals can navigate the complexities of workouts when providing accounts receivable financing facilities. Editor’s Note: Due to a printing error, we are rerunning this article which first appeared in the September issue.

Accounts receivable financing (factoring) is a robust solution for small and medium-size businesses (SMBs) that are a start-up, experiencing rapid growth or in distress. Accounts receivable financing provides short-term funding and benefits a company’s working capital cycle by providing improved cash flow when the company can immediately receive an advance while allowing the account debtor the normal terms of sale. Cash flow increases and allows the company to take advantage of supplier discounts, increase inventory and meet seasonal funding requirements. In addition, the company can experience an increase in sales when the factor extends credit, provides funding and assume the credit risk. This allows the company to provide more services or sell more merchandise to customers than they would otherwise. The company might extend longer terms of sales to customers, enabling them to generate new business or do more business with existing customers.

In accounts receivable financing, the focus shifts from assessing the company’s overall cash flow to assessing the collateral value of the accounts receivable. In accounts receivable financing, the key credit decisions are effectively based on an evaluation of the account debtor and the underlying collateral. It is not primarily based on traditional cash flow and balance sheet ratios. Not to say that the condition of the company is irrelevant in a factoring relationship, rather the traditional assessment of the financial statements take a back seat in importance to an assessment of the collateral. To a factor, the likelihood of the company’s failure is less important than the liquidation value of the collateral.

However, when clients face financial distress, properly managing accounts receivable financing workouts becomes critical. Ensuring these workouts are handled on a costeffective basis requires a combination of strategic planning,

efficient processes, and robust risk management. Important to the workout is the alignment of the needs of the various stakeholders, such as the secured finance company, suppliers, and owner/ shareholders, each with different perspectives on what constitutes a successful workout. The primary aim is to avoid loss and maximize value recoverable through refinancing, going concern sales, or liquidation.

Culain Capital

This article explores key strategies that commercial finance firms can employ to manage accounts receivable financing workouts effectively and economically.

Proactive Risk Assessment and Monitoring - Early Detection and Regular Reviews:

The factor’s ability to identify the early warning signs is crucial for preventing business failure including a potential write-off. Implementing advanced analytics and continuous monitoring early and often will help to identify potential issues in clients’ accounts receivable in a timely manner. Early detection allows firms to take preemptive actions, mitigating the risk of defaults.

Key signs include deteriorating financial performance, management issues, and external pressures. Effective monitoring and early intervention can preserve options and improve the likelihood of a successful workout. Common internal causes of failure include ineffective management, failure to manage risks, excessive debt, and fraud. External causes encompass economic conditions, competitive changes, and governmental actions.

In the Occupational Fraud 2024: A Report To The Nations , the Association of Certified Fraud Examiners reports internal issues such as fraud, mismanagement, and other internal control weaknesses are significantly more likely to lead to business failure compared to external problems. Specifically, internal causes are estimated to be about six times more likely to lead to business failure than external causes. This emphasizes the importance of strong internal controls and effective risk management within organizations.

A fine line exists between ineffective management, sloppy bookkeeping and fraud. The secured finance professional evaluates this fine line by identifying the early warning signs of collateral deterioration through the gathering of information and conducting regular financial reviews and credit

assessments of clients and their account debtors to ensure their financial health and credit worthiness remains stable. These reviews help in adjusting financing terms proactively rather than reactively. A sample of early warning signs appears in the table below.

Cost-effective and timely workouts require thorough information gathering. This involves analyzing a host of financial information from original invoices to agings to financial statements, assessing management capabilities, understanding industry trends, and using diagnostic tools, data extraction and other software to identify potential financial distress. Financial and management analyses help the secured finance professional understand the client’s situation and respond appropriately.

Early Warning Signs of Collateral Deterioration

Aging of accounts receivable Skipped invoice numbers

Unusual invoice amounts Payments where invoices are skipped

Payment no longer going to lockbox Unidentified sources of non-factored cash

Unsatisfactory verifications Returned product or canceled contracts

Large contra offset Delinquent taxes

Ongoing monitoring and a proactive approach to detecting issues are essential for timely intervention.

Secured finance professionals can effectively detect collateral deterioration by leveraging technology and automation. Third-party service providers, off-the shelf software and a robust portfolio management software will provide automated monitoring systems that provide the factor’s account executives and management the ability to continuously track receivables and flag potential issues, which reduces manual effort and enhances accuracy. These systems use algorithms to identify anomalies and trends that may indicate collateral risk. Additionally, digital platforms facilitate efficient communication and documentation, ensuring that all stakeholders have realtime access to relevant information. This realtime access minimizes delays and administrative costs, enabling auditors to promptly identify and address any signs of collateral deterioration. By integrating these

technological tools, auditors can maintain a proactive approach to managing and safeguarding collateral.

The Secured Finance Professional’s Decision to Act

When a credit facility becomes problematic, the secured finance professional must decide on the best course of action. This decision is influenced by considerations such as the client’s financial health, the credit worthiness of the account debtor, the value of the collateral, and the potential for recovery. Finance companies may opt for restructuring the credit facility, working with turnaround professionals, or initiating foreclosure proceedings. The primary goal is to maximize recovery while minimizing losses.

Whichever path the finance company determines to be the best course of action for all stakeholders, it will be critical that all parties maintain effective communication and negotiations. Without effective communication and negotiations, a successful outcome is unlikely. Maintaining transparent and consistent communication with clients and understanding their client’s financial situation allows finance firms to tailor workout solutions that are mutually beneficial. Factors have a host of remedies from lowering advance rates to the application of non-factored proceeds to address a collateral deficiency.

When a team takes ownership of its problems, the problem gets solved. It is true on the battlefield, it is true in business, and it is true in life.
— Jocko Willink

In situations involving allegations or determinations of fraud, effective communication and negotiations are crucial for achieving a successful outcome, particularly because emotions are often heightened, vehement and animated. Clear and transparent communication helps in managing the heightened emotional state of the parties involved. Establishing a calm and professional tone from the outset can de-escalate tensions and foster a cooperative atmosphere. It is important to listen actively to all parties, acknowledging their concerns and emotions, which can help build trust and facilitate more productive discussions. Through experience and observation, the factor’s team will develop strong negotiation skills needed to navigate workouts efficiently. Effective negotiation can lead to better recovery rates and reduced legal costs. Negotiations should be approached with a focus on finding

ACCOUNTS RECEIVABLE FINANCE

common ground and mutually acceptable solutions. This involves being empathetic and understanding the perspectives and motivations of each party. Utilizing a structured negotiation process can provide a framework for addressing issues systematically, ensuring that all relevant aspects are considered and that discussions remain focused on resolving the core issues.

Designing Flexible Restructuring Options

How the accounts receivable financing facility is agreed upon and structured will determine the options that the factor and the client will have to resolve a collateral deficiency. To be cost-effective and efficient, the parties can agree to have stale receivables relieved through a portion of a future advance, the swapping in of a new invoice to replace the old, having the client purchase the receivable back or relieve the receivable by applying against an established cash reserve. Should those remedies not prove successful, stopping all future advances, applying the receipt of non-factored proceeds to the stale receivables and collecting out of the remaining receivables would be a solution. In some situations, restructuring the outstanding net funds employed by converting a portion of the receivables into longer-term financing or equity can relieve immediate pressure on the client while preserving the relationship and potential future business.

Legal and Advisory Support

Another cost-effective strategy for an efficient and effective workout is to engage legal experts who specialize in financial restructuring and workouts. Their expertise can guide the firm through complex legal landscapes, ensuring compliance and reducing litigation risks. In addition, utilizing advisory services and turnaround consulting firms can benefit the factor and the client by helping the client improve their own credit management and operational efficiency. Better-run clients are less likely to default, reducing the need for costly workouts. Finally, outsourcing collections to third-party agencies with expertise in recovering receivables may be the last remedy. This can be more cost-effective than maintaining an in-house collections team, especially for smaller firms.

Conclusion

Managing accounts receivable financing workouts on a costeffective basis requires a blend of proactive risk management, effective communication, flexible restructuring, and the strategic use of technology. By adopting these practices, commercial finance firms can navigate financial distress scenarios more efficiently, ensuring better outcomes for both themselves and their clients. The focus on cost-effectiveness not only preserves profitability, but also strengthens client relationships, paving the way for long-term success in the competitive world of commercial finance.

Joe Heim is the chief credit officer of Culain Capital responsible for the firm’s credit analysis, risk assessment and secured financing and oversees the underwriting and servicing of accounts receivable financing facilities and other related transactions. Heim is a Certified Public Accountant and Certified Fraud Examiner. In 2022, he co-founded Culain Capital along with James Franz, Jim Jarosz and Fred Kulikowski to provide specialized accounts receivable financing, asset-based lending, and other working capital solutions.

COLLATERAL TRENDS

Intercreditor Agreements In Skilled Nursing Facilities: Collateral Allocations

That May Surprise You!

Intercreditor agreements in skilled nursing facilities (SNFs) present unique challenges due to the interplay of regulatory constraints and complex collateral allocations. Attorneys from Holland & Knight explore the intricacies of these agreements, highlighting the distinct features that arise in financing transactions within this highly regulated healthcare sector.

ABL lenders know well the complexity of “split collateral” intercreditors in which the ABL lender has a first priority lien in borrowing-base collateral and a term loan lender takes priority in just about everything else. This structure is commonplace in skilled nursing facility (“SNF”) financing transactions due to the prevalence of accounts-backed working capital facilities existing alongside term loans secured primarily by real property. While certain intercreditor terms mirror traditional ABL/term loan arrangements, SNF intercreditors have developed distinct features to address the realities of lending in this highly regulated industry.

The SNF Lending Landscape

A typical SNF transaction involves separate, though sometimes related, real property owners and licensed operator tenants. ABL working capital facilities are popular among SNF operators due to somewhat lengthy payment cycles and high advance rates on accounts. In the world of skilled nursing, eligible accounts are created as operators provide services to patients and then bill the patient or - more typically - the patient’s thirdparty insurance. Government payors such as Medicare and Medicaid often make up a large percentage of SNF accounts receivable. Given the strength of the U.S. government as a payor, borrowing base advance rates are typically strong at around 85%, and Medicare and Medicaid accounts are not typically subject to concentration limits. Collections on these accounts may take up to 150 days after the services were rendered, which can be a burden on a healthcare provider’s operations absent a working capital facility.

SNF mortgage lenders typically lend to one or more singlepurpose entity property owners, often cross-collateralizing the loans across multiple facilities. While these lenders utilize

traditional real estate underwriting based on the appraised value of the property, they also look to the strength of the operator. The typical SNF is dependent on the operations of a single tenant, the failure of which not only impacts cash flow, but could also have serious implications for patient care. For that reason, mortgage lenders in SNF transactions generally require a lien on the assets of the operator that will allow them to ensure continued operation of the facility in a downside scenario. If the operator is an affiliate of the property owner, the operator will often grant an “all assets” lien directly to the mortgage lender under a security agreement or in the subordination and attornment agreement. In transactions with an armslength landlord and tenant, operators usually grant a lien to the landlord under the lease, which is then collaterally assigned to the mortgage lender.

Despite their expectation of a lien on operator assets, mortgage lenders will allow, and often welcome, an accounts receivable line at the operator because it can be drawn to pay rent under the lease – which ultimately pays the debt service under the term loan.

Intercreditor Arrangements

As with any split collateral transaction, the relative priorities of the lenders are set forth in an intercreditor

JESSICA L. MACALLISTER Holland & Knight
ELLE G. MCCULTY Holland & Knight
ABBEY M. RUBY Holland & Knight

agreement. In a typical SNF financing, the working capital lender’s focus is on the most liquid collateral of the operator (namely, accounts receivable) and the assets required to liquidate that collateral. The working capital lender will expressly disclaim any interest in assets of the landlord. As discussed above, the term lender’s focus is on both the fixed assets of the landlord and the assets of the operating tenant. These differing orientations inform how each lender approaches negotiation of the collateral split in the intercreditor, but that is not the only consideration. Collateral splits in skilled nursing transactions are a bit more complex than the typical non-healthcare deal because they are heavily influenced by regulatory constraints. Additionally, the form of intercreditor agreement commonly used in SNF financings is heavily influenced by the intercreditor form used in financings provided or insured by the United Stated Department of Housing and Urban Development (“HUD”)’s Section 232 program. Over time, many non-HUD term loan lenders have adopted a modified HUD-form intercreditor as their own given market participant familiarity with the form (thus reducing costs and time for lengthy intercreditor negotiation). Additionally, many bridge lenders expect that their loans will be refinanced by HUD financing, and they want assurance that the working capital lender will accept the HUD form and not cause issues at the time of HUD closing.

Healthcare Licenses

In general, a secured lender cannot enforce a lien on a healthcare license in the same way it can on tangible assets like real estate or equipment. Healthcare licenses are considered regulatory permits, are highly regulated, and cannot be easily transferred without regulatory approval. From a working capital lender’s perspective, the ability to collect upon accounts receivable is heavily dependent on the maintenance by its borrower of the operational license. Indeed, any suspension or revocation of the license may severely limit its ability to collect upon outstanding accounts receivable, especially if the facility is forced into bankruptcy or insolvency due to the loss of its licensure, or if the license suspension or revocation is coupled with exclusion from the Medicare or Medicaid programs. While the SNF license is properly owned by the working capital borrower, SNF leases often require the operator to transfer the license to any successor tenant upon termination of the lease. Unlike medical office buildings or other less-specialized healthcare facilities like infusion centers, skilled nursing facilities cannot easily be adapted to another commercial use for retenanting or re-sale. The SNF licensure and the successful operation of the building as a skilled nursing facility directly and materially impact the value of the real estate as the term loan lender’s principal collateral. To that end, the working capital lender’s and the term loan lender’s interest in keeping the licensure intact align, but under the HUD form intercreditor and in most skilled nursing financing transactions, it is the term loan lender who rules the day in having the first-priority security interest in the SNF license.

Furniture, Fixtures and Equipment

How furniture, fixtures and equipment (“FF&E”) in a skilled nursing transaction are allocated may too come as a surprise. Similar to healthcare licenses, FF&E can be crucial to the operation of a skilled nursing facility. Accordingly, term loan lenders look at this collateral as part of the real estate underwriting - even though this collateral is not usually owned by the mortgage borrower. As with healthcare licenses, SNF leases typically require FF&E located at the facility to be transferred to successor tenants upon termination of the lease, limiting a working capital lenders’ ability to view FF&E as “boot” collateral. Like the landlord, the term loan lender views the true value of their collateral package is in the continued operation of the skilled nursing facility, of which the FF&E is inherently a part. SNF intercreditors generally reinforce that result by granting the first-priority security interest in FF&E to the term loan lender.

Accounts Receivable – The Lien Flip

It goes without saying that the operator’s ABL lender will, as an initial matter, have a first priority lien in accounts receivable. However, under the HUD intercreditor (and therefore in many SNF financings), there are instances where the lien will “flip” to the mortgage lender, and the accounts receivable lender will lose its priority status. This flip generally occurs not less than 30 days after written notice has been given by the mortgage lender following certain triggering events including defaults under the mortgage loan or the lease, or if the accounts receivable lender has ceased funding to the operator or accelerated the working capital loan. This feature protects the working capital lender in maintaining its first priority lien in the accounts receivable it is lending against in its borrowing base, but won’t allow the ABL lender to have a perpetual first lien in those receivables if, for example, it is no longer funding the operations of the facility or if the mortgage lender is pursuing remedies. As a practical matter, the mortgage lender’s delivery of this lien flip notice will require the mortgage lender or the landlord to be willing to fully take over the financing of the facility, since no accounts receivable lender would be willing to continue financing operations without the priority lien on receivables.

Operator Equity

In addition to taking a pledge of the assets of its borrower, a secured lender will often also require a pledge of the equity interests of its borrower. Foreclosing on equity interests can be far less expensive and time consuming than foreclosing on individual assets. In the healthcare context, however, changes of ownership (often referred to as a “CHOW”) of healthcare operating companies are often heavily regulated, and a secured lender cannot easily step into the shoes of the owner of the operating company or sell that equity to another operator without satisfying both state and federal CHOW requirements.

Despite this practical limitation, however, both the working capital lender and the real estate lender will often require the pledge to support their loan, as it both ensures that the equity is not ultimately pledged to anyone else, and also gives them bargaining position in any bankruptcy or similar proceeding. Notably, HUD does not require any pledge of operator equity, so this is one area where the HUD intercreditor does not set a standard course for the industry. As a result, the market is inconsistent on which lender takes the first priority lien. In many transactions, the working capital lender will obtain the first priority lien over the membership interest of its borrower. In some transactions, however, the mortgage lender will be successful in obtaining the first priority lien over the operator’s membership interest, for similar reasons to why it has the first priority lien over the operator’s healthcare license as discussed above.

In cases where the mortgage lender obtains the first priority lien over the operator equity, accounts receivable lenders will often require some limitations be included in the intercreditor agreement around exercise of that interest, including prior written notice of any exercise (giving the ABL lender time to consider whether it will continue lending or will deliver a cease funding notice, effectively triggering the lien flip and forcing the mortgage lender to fund operations). Another typical protection is an agreement by the mortgage lender to cooperate with the working capital lender in the collection of accounts receivable if it does obtain ownership and control over the operating company and ensure the accounts receivable lender is able to fully realize against the collateral it lent against prior to any foreclosure.

Conclusion

skilled nursing facilities, there remain many opportunities for healthcare lenders to succeed in the space - especially those armed with an understanding of the nuances of collateral allocations in these transactions.

Jessica MacAllister is an attorney in Holland & Knight’s Atlanta office. MacAllister represents institutional lenders, commercial banks and specialty finance companies in secured lending transactions, focusing on commercial real estate security in multistate transactions and related documentation and negotiations in all asset classes. She has specific knowledge and experience in healthcare finance transactions and healthcare real estate.

Foreclosing on equity interests can be far less expensive and time consuming than foreclosing on individual assets. In the healthcare context, however, changes of ownership (often referred to as a “CHOW”) of healthcare operating companies are often heavily regulated, and a secured lender cannot easily step into the shoes of the owner of the operating company or sell that equity to another operator without satisfying both state and federal CHOW requirements.

The U.S. skilled nursing market is large, valued at $179 billion in 2022, with projections to expand at a rate of 3.43% from 2023 to 2030. While many challenges exist in the financing of

Elle McCulty advises and counsels borrowers and lenders on complex debt financings. McCulty leads the firm’s Healthcare Finance Team. Serving clients in the financial services, healthcare and private equity industries, McCulty works on a diverse set of matters.

Abbey Ruby is a financial services attorney in Holland & Knight’s Nashville office and a Practice Group Leader of the firm’s Financial Services group. Ruby brings insight to lenders, agents, private equity sponsors and corporate borrowers in complex financings and related transactions, including acquisition financings, first and second lien facilities, bridge loan facilities, mezzanine loans, asset-based lines of credit, real estate and construction financings, cash flow loans, capital call/subscription facilities, restructurings and workouts.

BANKRUPTCY TRENDS

Dancing Around Workouts: Is it Time for the Article 9 Two Step?

Hilco Streambank’s Richelle Kalnit explores a transformative approach to restructuring retail and consumer brands facing bankruptcy.

The process of restructuring retail and consumer companies is at an inflection point. First-lien lender recoveries in bankruptcy are decreasing because brands are being sold well after the connection with the customer is lost and valuable ecommerce connectivity is broken.

The challenge is that sale processes for retail and consumer brands are unpredictable, and notwithstanding the best efforts of skilled investment bankers to achieve a going-concern sale, these processes often result in a piecemeal sale of assets, i.e., intangible assets separate and apart from inventory. By the time a sale comes to a head, the intangible assets have been severed from the customer, resulting in lower valuations because buyers deduct from their purchase price the cost to rebuild the brand and re-engage the customer.

It’s time to consider a new construct to maximize the value of retail and consumer brands and orchestrate better outcomes.

Stepping in Time: Aligning Article 9 and Bankruptcy

This article proposes that we change the tune when it comes to retail and consumer restructurings, particularly those involving nonresidential real estate leases, and adopt the “Article 9 Two Step.”1

“In the Article 9 Two Step: (1) the senior lender conducts a public foreclosure sale of the company’s intangible assets under article 9 of the Uniform Commercial Code (UCC), and then (2) the senior lender funds a chapter 11 bankruptcy to sell the company’s remaining assets and address nonresidential real estate lease liabilities, while also allowing a creditors’ committee to perform its investigatory and statutory duties.”

The Article 9 Two Step goes like this:

Step 1 – Selling the Intangible Assets Through Article 9: Finding a Chair Before the Music Stops: When a senior lender to a retail or consumer brand is in the position of the fulcrum security, rather than selling the intangible assets during or after the store closing process, do that first. Conduct a sale

process under article 9 of the UCC of the borrower’s intangible assets prior to the bankruptcy filing. Set a bid deadline and provide for a public auction (as opposed to a strict foreclosure 2), so that the market is canvassed in a fashion nearly identical to a sale under section 363 of the Bankruptcy Code.

This allows for the parties best positioned to assist in the maximization of the company’s intangible assets – its employees – to assist in the sale process.

Employees are often the key holders of critical assets such as data and logins for ecommerce sites and social media accounts. Selling these assets prior to bankruptcy increases the likelihood that a brand’s ecommerce site will remain operational during and through the sale process and that a buyer will be able to maintain continuity with the customer. Maintaining an uninterrupted relationship with the customer – both through continuous messaging and through an operational ecommerce site and social media channels, each controlled by the buyer – is critical to maximizing value.

It also offers a buyer optionality to assume the senior lender’s debt. This could be attractive to a buyer in the event it seeks to conclude the article 9 sale process itself through a credit bid, and allows it to work in tandem with the borrower in the resulting bankruptcy. Furthermore, it allows errant liabilities to be extinguished as part of the bankruptcy, giving comfort to an “as is, where is” buyer in the article 9 sale.

Undoubtedly, there would be certain concessions that would need to be made by a buyer of intangible assets in such a circumstance, such as granting a limited license back to the borrower to allow for the bankruptcy and remaining asset sales and wind-down. 3 However, licenses such as this are regularly granted as part of sales in and outside of bankruptcy and, where the brand buyer has purchased the brand prior to the bankruptcy, it is better positioned to control the terms of the circumstances under which the debtor/borrower may use the name. In addition, this construct assumes cooperation by the borrower/debtor. This is not surprising nor is it different than what would occur in a Chapter 11 liquidation, which is conducted voluntarily by a debtor typically in concert with approval and funding from the lender.

Ultimately, this strategy capitalizes on the substantial difference between forced liquidation value (FLV) and orderly liquidation value (OLV) of retail brands. By orchestrating a prebankruptcy sale, stakeholders stand to benefit by potentially

achieving values closer to OLV. While FLV and OLV vary by retail brand based on various factors, the OLV of brands which derive their income from retail channels may see an OLV which can be 60-75% greater than FLV.

Step 2 – When the Music Stops: Maximizing the Value of Remaining Estate Assets Through Bankruptcy: Following the article 9 sale, the borrower would file for bankruptcy in order to sell any remaining tangible assets (often more difficult to sell through an article 9 sale), address lease liabilities (typically incapable of being addressed in an article 9 sale) and to allow for the creditors’ committee to conduct its investigation into the liens and claims of the secured lender and into the prepetition activities of the debtor. Much of this theoretically could be done through a Chapter 7 bankruptcy instead of a Chapter 11 bankruptcy, although without financing, a Chapter 7 trustee would have difficulty selling inventory through retail stores.

fetched. Workout and restructuring professionals are wellaware that alternatives to bankruptcy, such as assignments for the benefit of creditors (ABCs) and receiverships, are being increasingly considered and utilized. However, ABCs are inadequate when it comes to addressing retail lease liabilities except in the rare circumstance where landlords consent to the termination of leases. And receiverships – a creature of state law for which there may not be consistency across states –often require court approval for sale and wind-down activities, similar to a bankruptcy. 4

The idea is also not implausible because lenders often utilize restructuring support agreements (RSAs) or stalking horse agreements (or both). Setting up an article 9 sale before bankruptcy mimics that, but does not rely on the bankruptcy to achieve the sale of the intangible assets.

In other respects, the Article 9 Two Step is quite novel. When bankruptcy arises in the context of an article 9 sale process, it is typically used to stave off such a process – the lender conducts an article 9 sale process of a borrower’s assets following a default, and the dissenting borrower files for bankruptcy to prevent the foreclosure. Bankruptcy is not typically used in tandem with article 9 to maximize value. Retail and consumer brands would be the perfect use case for such a construct.

Until recently, the Article 9 Two Step would have been difficult to achieve given the capital structure of many retail and consumer brands. Senior lenders historically recovered in full, or close to it, even in a Chapter 11 liquidation, leaving the second (or more junior) lien lender as the fulcrum security.

The Rise of Non-Bankruptcy Alternatives, but Rarely in Concert with Bankruptcy

In some respects, with the increase in utilization of nonbankruptcy alternatives, the Article 9 Two Step is not far-

Article 9 – A Primer

Article 9 of the UCC governs secured transactions, including the foreclosure of collateral by a lender to satisfy a debt. When a borrower defaults on a secured loan, the lender has the right to repossess and sell the collateral. 5 Such a sale must be conducted in a “commercially reasonable” manner. 6

Why Now?

Adapting the Process to the Changing Capital Structures

Until recently, the Article 9 Two Step would have been difficult to achieve given the capital structure of many retail and consumer brands. Senior lenders historically recovered in

full, or close to it, even in a Chapter 11 liquidation, leaving the second (or more junior) lien lender as the fulcrum security. The senior lender would have had no incentive to conduct this Article 9 Two Step and the junior lender would have had no right to do it, due to typical “silent second” provisions of an intercreditor agreement.

However, as the Wall Street Journal reported, recoveries of senior lenders in bankruptcies are decreasing. “For companies exiting bankruptcy so far in 2024, first-lien recoveries have been 50% … compared with an average of 74% in 2021 and 2022.”7 Given this, the time is ripe for senior lenders to consider a twostep process that provides the opportunity to increase recoveries when compared to the bankruptcy single-step.

Adapting the Process to the Evolving Assets

A sale of intangible assets prior to bankruptcy means that it is more likely the employees needed to maximize the value of customer engagement – marketing and ecommerce experts –are employed by the company at the time of the sale. This allows a brand to maintain the relationship with its customer through uninterrupted marketing and ecommerce initiatives, thereby maximizing value. It also alleviates some of the cost of the bankruptcy process by providing for the sale of these assets to take place in a more cost-effective fashion, through an article 9 sale.

actual dressing rooms, as well as data that contributes to a company’s success such as inventory optimization strategies and artificial intelligence prompts utilized as part of its marketing strategy.

The construct proposed in this article allows for a comprehensive transfer both of data and knowledge pertaining to that data. A “data dump” will no longer be sufficient. It is already insufficient. Data will need to be transferred from one person with knowledge to a recipient who can communicate with the transferor, and that transferor needs to be well-positioned to transfer know-how and documentation related to that data.

Doing this at the end of a bankruptcy liquidation, when critical employees have often departed, will devalue the data.

A “data dump” will no longer be sufficient. It is already insufficient. Data will need to be transferred from one person with knowledge to a recipient who can communicate with the transferor, and that transferor needs to be well-positioned to transfer know-how and documentation related to that data.

In mergers and acquisitions transactions, data will start to play an increasingly critical role as part of the package of intangible assets, and not just in transactions involving technology or data companies. Ensuring that key company employees as well as customer engagement are maintained will become even more important in this data revolution. Traditional forms of intangible assets such as brands, patents, software and domain names have been supplemented with data. And that data is ever-evolving, going well beyond transaction data to cover artificial intelligence-enabled search preferences and products sampled in virtual and

While, in theory, the data is typically accompanied by a data dictionary, that term is a misnomer, as the data acquirer may understand what “M” and “F” mean within context (male and female), but may not be able to decipher what “1” and “2” mean without institutional knowledge. Workout and restructuring professionals will be wellpositioned to structure processes that maximize value of this enhanced data, which is what the Article 9 Two Step seeks to achieve.

Potential Challenges to the Two Step and

How to Address Them

It would be understandable to raise certain concerns related to the Article 9 Two Step. Three such concerns are addressed here.

One concern could be cost. It could be argued that two legal processes – an article 9 sale followed by a bankruptcy – would be more expensive than one. While the construct envisions two legal processes, this fact alone should not create additional fees. In fact, given that the parties to each step of the process would be the same (lender, borrower), and given that this construct would likely limit the time in bankruptcy, it is more likely to reduce rather than to increase fees.

Another concern could be the use of bankruptcy courts to address liabilities without utilizing them for the benefit of their “free and clear” sale orders under section 363 of the

Bankruptcy Code. Much as it is often stated that bankruptcy should not be used for the sole benefit of a secured lender, would this construct mean that bankruptcy would be nothing more than a vehicle to reject real property leases? Practically speaking, no. The benefits of maximizing value outweigh the costs of the limited use of the bankruptcy court system.

In fact, this construct would alleviate pressure on the courts, which are often overwhelmed during times of economic distress. Moreover, it will allow creditors’ committees – whose constituents would be “out of the money” in these transactions (as they assume the first lien lender would be the fulcrum security) to focus on their important investigatory obligations.

Finally, in an article 9 sale, assets are transferred “as is, where is.” One might question whether an ongoing operation can be transferred to a buyer using article 9, and whether this would raise issues of possible successor liability. Given that this construct assumes cooperation of the borrower, it is more likely that operating assets would be able to be transferred than in a liquidating bankruptcy, where operating assets are often shut down. While contracts such as those required to maintain ecommerce functionality and customer connectivity may require consent of the counterparty to assign, those counterparties may be more open to assignment by the buyer than being left without the buyer’s go forward business, also reducing the likelihood that those parties would argue that the buyer has successor liability.

Coda

As first lien lenders continue to confront diminishing recoveries, putting them in the fulcrum position, and as the next wave of consumer and retail distress comes into focus, secured lenders and workout and restructuring professionals need some new moves.

In restructuring, where timing is everything, it is time to leverage the strengths of both article 9 and bankruptcy as a duet, before the music stops.

Special thanks to Chris Desiderio (Nixon Peabody), Doug Jung (Hilco Diligence Services), Brent Weisenberg (Lowenstein Sandler), Gabe Fried (Hilco Streambank) and Jarrod Anderson (Hilco Enterprise Valuation Services) for their valuable insights in developing this article.

Richelle Kalnit is chief commercial officer, senior vice president at Hilco Streambank. She advises companies, lenders and stakeholders on matters related to intangible assets, including brands, software, patent portfolios, digital assets and marketplace accounts, as well as how artificial intelligence (AI) can impact the utilization of these assets. Kalnit’s services often take the form of sell-side mandates, where she brings to bear nearly 2 decades of legal and M&A deal experience

managing the nuances and unique aspects of the sale of these types of assets. She is responsible for developing an unmatched commercially reasonable sale process product under Article 9 of the Uniform Commercial Code for intangible assets, and is adept at managing and leveraging the dynamics surrounding those processes.

Kalnit has experience in the sale of intellectual property assets on both the sell- and buy-side in bankruptcy, Article 9 foreclosure transactions, out-ofcourt sale processes, receiverships, and assignments for the benefit of creditors. She works closely with consumer privacy ombudsmen when they are appointed in connection with the sale of personally identifiable information in bankruptcy.

1 The name of this construct – the “Article 9 Two Step” – is based on the Texas Two Step, a controversial legal maneuver sometimes utilized to address mass tort liabilities in which a parent company utilizes Texas state law to split into two entities, followed by a bankruptcy for the newly created entity holding the mass tort liabilities. Of course, beyond the name, the construct proposed here is very different.

2 A public auction will also stave off an argument that the intangible assets were sold for less than reasonably equivalent value.

3 The lead case could be filed under a name that differs from the brand that was purchased out of the article 9 transaction.

4 See e.g., In re Aiwa Corp. , Case No. 21-07702 (July 28, 2021) (“Texas has long held that receiver sales should be confirmed by the court.”).

5 See UCC § 9-609.

6 See UCC § 9-610.

7 Top-Ranking Lenders See Diminishing Recoveries in Bankruptcy, Wall Street Journal , May 14, 2024.

ELECTION

TRENDS

Reflections (So Far) on the Year of Elections –Part One

As we near the end of the “Year of Elections,” nearly half the world’s population is witnessing significant political shifts that could reshape global economies. David Chmiel explores the unexpected election outcomes in Europe, their implications for public policy, and the broader economic landscape, revealing a complex interplay of uncertainty and opportunity. Part Two of this article will appear in the Jan/Feb 2025 issue.

2024 has, quite rightly, been dubbed the “Year of Elections”, with estimates that almost four billion people – around half the world’s population – live in countries holding some form of national election this year. Equally importantly, many of these elections have taken or will take place in key regional and global economies against backdrops of considerable uncertainty linked to the lingering effects of inflation and economic dislocation. One could confidently predict at the start of this year that the global political landscape would look strikingly different by year-end, once the electoral dust settles.

So far, that prediction has proven true – and the Year of Elections is not over yet as it reaches its crescendo with November’s U.S. presidential and congressional elections. But, even so, significant political shifts have already occurred in many parts of the world. These, in turn, foretell a period of potential change in public policy with consequences for macroeconomic conditions and, more specifically, the economic and regulatory environment in which assetbased lenders operate. In this article, we look at some of the conclusions that can be drawn from recent key election results and political developments outside of the U.S., with a particular emphasis on key European economies, where so many SFNet members are based. In Part Two, we will consider some of the global political and economic implications of the U.S. election results - whatever those may be.

The European Electoral Landscape 2024 has produced both the expected and the unexpected in European electoral politics. In the UK, a general election was almost certain to happen this year with the Conservative government’s mandate expiring in December. While Prime Minister Rishi Sunak’s decision to call the election for the 4th of July was earlier than many expected, the consequent landslide for the opposition Labour Party and the formation of

a new government under Sir Keir Starmer were anticipated given how badly the Conservatives had trailed Labour in the polls for much of the previous two years. In fact, the Conservatives suffered their worst electoral defeat in history.

Snap legislative elections in Portugal in March 2024 resulted in a surge in support for the populist Chega party in that country. This reinforced a growing trend across Europe for voters to shun traditional, establishment parties in favour of populist, anti-establishment alternatives such as France’s right-wing National Rally (the former National Front) and left-wing France Unbowed, the Netherlands’ PVV, Germany’s AfD and the UK’s Reform Party. That trend gained further resonance in June when elections across the 27 member states of the European Union for the European Parliament – effectively the “lower house” of the EU’s legislative function – saw increases in support for populist parties on both the left and right. While the European Parliament is not the principal driver of policy direction in the EU, its overall composition can still influence the EU’s areas of focus in policymaking. Moreover, it raises the spectre of even further fracturing and unpredictability in Europe’s politics in the years to come.

Probably the most significant European political surprise of 2024 – to date – arose as a direct result of those European parliamentary elections. With French voters rejecting parties supporting President Emmanuel Macron in favour of those opposed to his policy agenda, he opted to seek a new mandate by dissolving parliament and calling immediate legislative elections. Those elections led to a hung parliament, with tactical voting in the second round preventing the right-wing National Rally from securing a majority of seats and with the New Popular Front – a coalition of left-leaning parties - securing a plurality in the National Assembly. France now enters a period of greater political uncertainty.

Finally, while Germany has not held any national elections in 2024, state elections in the former East Germany also saw increases in support for populist parties to the particular detriment of the Social Democratic Party of incumbent German chancellor Olaf Scholz. As the German economy confronts considerable economic headwinds and as voters remain concerned about issues such as immigration, Scholz faces significant challenges as he enters a re-election year in 2025.

The Policy Implications – Balancing Insecurity with Competitiveness

One of the most striking longer-term political trends emerging over the past decade or more in European and global politics has been the blurring of the lines between the “right” and “left” and a greater propensity for voters of all ideologies to take a more activist approach to economic policy and regulatory oversight of economic and commercial activity. In part, this is a lingering effect of the large-scale government interventions undertaken at the height of the COVID-19 pandemic, but it is also rooted in broader concerns around economic security linked to inflation, housing shortages and other quality of life issues often at the forefront of voters’ minds.

There are few more immediately apparent examples of this shift than some of the decisions taken by the UK’s new Labour government. When Labour previously held power between 1997 and 2010 under prime ministers Tony Blair and Gordon Brown, there was still a broad preference for private sector-led initiatives in the provision of services. However, in 2024’s election, Labour campaigned openly on promises of much greater public sector involvement in economic life and service provision. One of Labour’s first acts on taking power was to announce the creation of “Great British Energy” –a government-owned body that will invest in renewable energy projects and, itself, own and operate green power generation activities in competition with private sector utilities. Labour has committed to the gradual renationalization of the UK’s rail industry as and when current rail franchise agreements expire. There is persistent media speculation about whether the government will also seek to take back ownership of other utilities overburdened with debt or facing structural challenges. This debate about public versus private ownership of utilities in the UK represents a dramatic realignment in political discourse about the role of government as an economic actor. Privatization of state-owned assets was a cornerstone of former Conservative prime minister Margaret Thatcher’s policy

agenda in the 1980s. Yet, polling undertaken by YouGov in April 2024 showed that 67% of all British voters and about the same percentage of Conservative Party supporters now either tended to support or strongly supported the renationalization of utility companies. The political pendulum has swung back towards a more activist and interventionist government regardless of party affiliation.

The opportunities for the ABL sector presented by artificial intelligence and systems such as ChatGPT are all getting a lot of attention, but pessimism about the broader economic outlook and business projections then often leads to investment being deferred.

The shift in support for populist political parties in many parts of Europe is caused, to a significant degree, by sociocultural issues such as immigration. However, economic dislocation and uncertainty also play their part, and such motives cannot be ignored when assessing how governments are engaging more directly in economic policy. It was, for instance, French president Macron’s efforts to bring about systemic reforms in the French pension system that fuelled widespread protests in France in 2023 and arguably contributed to the shifts in support in this year’s legislative elections. While Macron and his political allies say that those reforms are non-negotiable, it will be interesting to watch whether they come under further pressure as the French National Assembly is now under the control of left-leaning political parties. There is a careful balance to be struck

between economic policies that aim to address inequality through, for instance, tax policy and business regulation and those that aim to encourage growth and investment. This is a paradox highlighted in the recent report by former European Central Bank president Mario Draghi on European competitiveness and the need for broad EU-wide investment in efforts to boost productivity and innovation.

Europe lags behind many of its peer competitors in innvovation – something seen in the asset-based lending sector with companies’ performance somewhat benign and productivity low. It is difficult to tell if this is a lingering effect of the pandemic or other subsequent economic and geopolitical upheavals, but the overall effect is delayed capital investment in new technology. The opportunities for the ABL sector presented by artificial intelligence and systems such

as ChatGPT are all getting a lot of attention, but pessimism about the broader economic outlook and business projections then often leads to investment being deferred. Continued economic and political uncertainty maintains this circle of indecision. This could prove problematic over the longer term for EU economic competitiveness as social demands from demographic challenges such as aging populations risk economic stagnation equivalent to that seen in Japan. Nevertheless, the change in government in the UK and the realization across Europe of the need to innovate and be competitive may help to clear some of the post-Brexit logjams that have hamstrung economic activity in the years immediately following the UK’s exit from the European Union. Only time will tell.

Mario Draghi’s recent report focuses on a number of areas which resonates for all SFNet members. He describes four “pillars of prosperity” necessary for Europe to succeed, namely to:

Be sustainably competitive

Maintain economic security

Provide Open Strategic Autonomy

Allow fair competition

But all these pillars link bank to GDP growth, improved productivity and sustained prosperity. This, in turn, requires investment to build (and maintain) top-class infrastructure at a time when overall infrastructure investment in Europe lags far behind that of strategic and economic competitors. Draghi considers this the root cause of the lack of competitiveness noting that American companies currently invest €700 billion a year more than European ones. While that may seem like a daunting figure, it constitutes a comparatively small proportion of GDP. The problem arising out of the current political environment in this Year of Elections is that it is uncertain if governments will pursue policies that will help or hinder competitiveness. The most successful economies will be those whose companies operate in an economic and regulatory environment whee they can propel themselves forward by leapfrogging certain norms and standards and implement innovative technology. Consider how countries like Poland, in liberalizing their banking systems at the start of the 21st Century, simply ignored payment systems like checks and moved directly to the implementation of debit cards, well in advance of some of their peer competitors in more established economies.

We all know that sustainability and broader ESG objectives are at the forefront of the minds of current and prospective clients. But businesses also grapple with perceived imbalances in the application of these rules and have to manage the potentially increased costs that come with this. One simple example in an ABL business context is that the cost to rent an EV loader currently runs at two to three times the fossil fuel alternative. The dilemma for businesses is how to do the right

thing while also making the economics add up. Moreover, it was only last year that the EU adopted a comprehensive set of clean technology regulations, which, some have argued, has led to it being at a competitive disadvantage in the race to develop these critical new technologies at cost-effective prices that could prove the key to resolve these kinds of dilemmas.

Another example lies in the expectation that the UK’s new Labour government is widely expected to introduce a broad range of new workers’ rights and protections while also agreeing to above-inflation increases in pay for public sector workers, with potential consequences for pay rates more generally. It’s worth noting that the Draghi Report also calls for the EU to develop a highly skilled and adaptable workforce to remain competitive. Governments confront the difficult task of addressing the issues of economic insecurity that have contributed to the rise of populism across Europe while also balancing this against finding ways to improve productivity and encourage economic growth.

A major test for the UK’s future economic and regulatory direction will come this fall as the Labour government introduces its first budget. Sir Keir Starmer has already warned that the budget, due to be delivered on the 30th of October, will be “painful” with both spending cuts and tax increases widely anticipated. The likelihood is that the government will introduce substantial changes to the UK’s capital gains and inheritance tax regimes given that Labour promised on the campaign trail that it would not increase headline rates of income or corporation tax or VAT. Perennial questions remain about how Labour will also deal with more technical tax changes such as the carried interest rule and capital investment relief. To a major extent, the anticipated immediate post-Brexit exit of workers in financial services and related sectors did not materialize, but the risk is that a raft of new tax changes may predicate such an exit now, to the detriment of the UK economy. The challenge for the new government lies in ensuring that tax or regulatory reforms do not simultaneously deter investment – either foreign or domestic – or otherwise stunt the economic growth that the UK needs. All of this comes at a time when the ABL industry has already seen the effects of differing valuations adapted by private equity investors to reflect comparatively slow economic activity.

The Rest of the World

It would be remiss not to note that elections outside of Europe have also offered important insights into the global direction of travel politically. Whereas in Europe the overriding theme in this Year of Elections seems to be the frustration of voters with the status quo, in other parts of the world there is a more measured desire for continuity albeit with differing degrees of enthusiasm.

In Indonesia and Mexico, voters elected presidential candidates who campaigned very much on promises to continue with the broad policy agendas of their popular

incumbent predecessors. With both countries being sources of critical natural resources that have, in recent years, shown a propensity towards resource nationalism, this will have implications for global supply chains. Indonesia has, for example, in recent years pursued policies aimed at limiting exports of unrefined resources and ensuring more. Mexico has capitalized upon its substantial stocks of resources critical to the global green economic transition by nationalizing certain industries outright, particularly in respect of lithium production. There is no reason to believe that new governments in either of these countries will seek to deviate from such policies that focus on prioritizing domestic economic interests.

In India’s parliamentary elections in May and June, the Bharatiya Janata Party of incumbent prime minister Narendra Modi and its allied parties retained power, albeit surprisingly with a smaller majority than expected owing to voter concerns around economic insecurity.

Prime Minister Modi has said that his government will focus on economic policy aimed at addressing these concerns. Meanwhile, in South Africa, the African National Congress was unable to secure an outright majority of seats in the country’s National Assembly for the first time since the end of the Apartheid era in 1994 amid widespread voter concern around issues around corruption and slow economic growth. It has now formed a government with coalition partners in order to retain power. Once again, issues of economic policy and opportunity are causing voters to be less predictable and for political leaders not to take their support for granted.

Conclusions

long-standing assumptions about our understanding of international affairs. Persistent sluggish economic performance combined with the insecurity that comes from inflation and related challenges are causing voters around the world to look beyond traditional parties and long-standing incumbent leaders for solutions. Where incumbents are successful, they are doing so partially by pursing policies that, in and of themselves, challenge the political status quo.

It’s worth noting that the Draghi Report also calls for the EU to develop a highly skilled and adaptable workforce to remain competitive. Governments confront the diffi cult task of addressing the issues of economic insecurity that have contributed to the rise of populism across Europe while also balancing this against fi nding ways to improve productivity and encourage economic growth.

We have noted only a few of the many issues that will land on the desks of new and incumbent governments over the next months and a host of others, from tariffs and trade wars to oversight of foreign investment and the protection of strategically critical national industries will be equally important. It is also worth noting that many of these systemic problems require longterm solutions and one of the perennial challenges is that governments are often short-termist in nature – focusing on the decisions that will affect their immediate electoral prospects rather than those that may have short-term consequences for long-term gains. Nothing can be taken for granted and the stormy political seas in which businesses have found themselves operating are likely to continue as we move on to 2025 and as the Year of Elections becomes a matter of history.

David

Chmiel is the managing director of Global Torchlight, a geopolitical risk advisory firm, and a prolific speaker and commentator on international affairs and their impact on business.

If one word was to describe the overall state of the global political environment as this Year of Elections draws to a close, it would be “unpredictability.” Domestic and international political changes over much of the past decade have shattered

Innovations in Credit Insurance: A New Era for Financial Institutions

In the dynamic world of finance, credit insurance has evolved from a mere safety net to a vital strategic tool for lenders. Discover how innovations in technology and data analytics are reshaping risk management, enabling financial institutions to enhance lending capabilities, reduce defaults, and foster economic growth in an increasingly complex market.

In today’s ever-changing financial landscape, credit insurance has become a pivotal tool for lenders and financial institutions. Traditionally seen as a safeguard against the risk of non-payment by debtors, credit insurance has undergone significant innovations that not only enhance protection but also unlock new opportunities for businesses. These advancements are transforming how companies approach lending and risk management, providing a competitive edge in an increasingly complex market.

The Evolution of Credit Insurance and Changing Perspectives

Historically, businesses relied heavily on Letters of Credit to safeguard against loss, which proved expensive and inefficient for many industries and situations. Credit insurance was developed as a better alternative, primarily focused on protecting exporters from the risk of non-payment by international buyers. This meant insuring foreign receivables to ensure that businesses engaged in international trade could mitigate the risks associated with dealing with buyers who might default due to economic or political instability in their countries.

However, as the commercial lending market has evolved, so has the scope and application of credit insurance. Today, credit insurance is not limited to just foreign receivables. It has expanded to cover entire portfolios of receivables, offering comprehensive protection for domestic and international transactions. This advancement has made credit insurance a versatile tool for many financial institutions, from asset-based lenders to banks and factoring companies.

Once considered a nice-to-have option, credit insurance has become a necessity in the market. Gone are the days of manual searching and data entry to secure and maintain policies. Advances in credit insurance technology have allowed lenders to proactively make risk-based decisions, automate policy monitoring, create additional value, and increase overall stability.

Informed Decision Making Through AI

to credit insurances has dramatically changed the landscape, providing more efficient ways to assess and manage risk. With access to massive amounts of data, insurers can now deliver more accurate and timely risk assessments, allowing policy holders and ultimately their loss payees, namely lenders, to make more informed decisions.

Risk assessment tools driven by AI can analyze numerous factors, from broad economic markers to individual borrower behavior, predicting the likelihood of default. This allows insurers to offer more tailored coverage and pricing, reducing the cost of credit insurance for policy holders. Additionally, these tools can continuously monitor the risk profile of borrowers, providing real-time updates and alerts. This proactive approach to risk management ensures that lenders can take timely action to mitigate potential losses.

Enhancing Policyholder Experience Through Automation

Today, policies and all connected data can be monitored online. As a result, most carriers are now providing digital platforms to enhance the policyholder experience. These platforms simplify securing and managing credit insurance, making it more accessible and userfriendly. Policyholders can apply for coverage, manage policies, and file claims online, saving resources, reducing administrative drains and increasing efficiencies.

Third-party platforms, like T.R.U.S.T.™, deliver value through easily accessible data insights, helping lenders better understand their risk profiles and make informed decisions. They offer a more comprehensive solution than standard platforms, providing a full picture by accessing AR and policy data, while acting as a watchdog for the carriers and the policy holders. The automation enabled through third- party platforms has also created incredible efficiencies in claims filing. With immediate access to data needed to file, and alerts for coverage issues and deadlines, policy holders can file claims on time with a better success rate. Additionally, some carriers will now allow Lending Institutions to initiate claims filings within certain policy

RICK PEREA FGI Risk
GREG MCBRIDE FGI Risk

structures, thus allowing these institutions to have greater control of the policy than before. This level of transparency and accessibility enhances customer satisfaction and fosters long-term relationships between insurers, lenders, and their clients.

Added Value

Traditional credit insurance policies were often complex and expensive, making their use better applied to larger financial institutions and well-established businesses. However, more recently, more tailored and cost-effective solutions have become available, opening new opportunities and creating value for smaller businesses and lenders as well.

Credit insurance has given asset-based lenders the ability to offer more competitive loan structures to their clients. With the risk associated with default eased by credit insurance, asset-based lenders can extend larger amounts of credit and offer better interest rates. This, in turn, helps their clients to grow and expand their businesses, providing value for the lender and client.

Banks are also benefiting from expanded access to credit insurance. By adding credit insurance to their risk mitigation programs, institutions can reduce the risk associated with lending, thus approving more loans and supporting a broader range of businesses. During economic uncertainty, this is particularly important, as traditional lending criteria may be more stringent. With credit insurance, banks can continue to provide vital support to their clients, even in challenging times.

Factoring companies, which provide essential liquidity, and in some cases credit protection and back-office services to businesses by purchasing their accounts receivable, are also seeing the value of credit insurance. It helps companies manage the risk of non-payment by buyers, ensuring they can maintain a steady flow of funds to their clients. This is particularly important for small and medium-sized enterprises (SMEs), which often rely on invoice factoring to manage their cash flow and sustain their operations.

Credit insurance has also become a sales-growth tool for policy holders. With enhanced access to credit information, businesses have turned the policy into a tool for profit generation by strategically approaching targeted prospects and entering new territories or industries they previously avoided due to lack of information.

For lenders, advances in credit insurance provide an added layer of insight when underwriting and performing due diligence, allowing them to take on clients they may not have been able to previously support. Financial institutions leveraging credit insurance offer a clear competitive advantage. By incorporating credit insurance into their offerings, institutions can differentiate themselves, attract more clients and reduce their overall risk exposure. This enables them to expand their lending portfolios and now, thanks to technological advancements, operate more efficiently in today’s competitive market.

Credit Insurance and Financial Stability: A Symbiotic Relationship

The impact of credit insurance on financial stability is profound. By providing a safety net for lenders, credit insurance helps maintain confidence in the financial system, especially during times of economic volatility. When lenders know they are protected against the default of

the borrower’s underlying assets, they are more inclined to continue extending credit, even in uncertain times. This continuous flow of credit is crucial for maintaining economic activity and supporting businesses.

Likewise, credit insurance can contribute to the stability of financial institutions themselves. By reducing the occurrence of bad debts, credit insurance helps to strengthen the balance sheets of lenders. This enhances their ability to withstand economic shocks and maintain their lending activities. For banks, this can translate into improved capital ratios, a key measure of financial health.

Basel IV, though not yet fully implemented, aims to strengthen the international banking system as a continuation of the reforms started in Basel I, II and III. There is much speculation that as a part of Basel IV, credit insurance may be considered a capital relief under the new regulations. Banks would be able to purchase credit insurance to lower their risk-based capital requirements by transferring some risk to insurers, providing more stability.

Conclusion

Innovations in credit insurance are transforming how financial institutions manage risk and support their clients. By leveraging advanced technologies and tailored solutions, institutions can enhance their lending capabilities, reduce the risk of default, and provide more competitive terms to their clients. As the financial landscape continues to evolve, credit insurance will remain a crucial tool for fostering growth, stability, and resilience in the market.

The future of credit insurance is bright. Continued advancements will deliver even greater benefits to lenders and borrowers. By embracing credit insurance and these innovations, financial institutions and their clients can better navigate economic changes and continue to drive growth and prosperity.

Rick Perea serves as director of FGI Risk, a division of FGI Worldwide focused on maximizing credit insurance benefits for businesses and lenders. Through expertise in commercial finance and risk mitigation, Perea builds relationships and fosters new business for FGI across the Southeast marketplace.

Prior to joining FGI, Perea spent five years with Allianz Trade (formerly Euler Hermes), most recently as senior agent of the Southeast. He holds a degree in business management from California State University Fresno and Certificate of Financial Planning through the University of Georgia.

Greg McBride serves as director of FGI Risk, a division of FGI Worldwide focused on maximizing credit insurance benefits for businesses and lenders. Through expertise in risk mitigation, McBride builds relationships and fosters new business for FGI across the Midwest marketplace.

Prior to joining FGI, McBride spent eight years with Allianz Trade (formerly Euler Hermes), most recently as regional vice president of the Midwest. He holds a degree in business management from Robert Morris University.

CROSS-BORDER FINANCE ESSAY

Valuation vs. Reality: Exploring How Net Orderly Liquidation Value (“NOLV”) Is Impacted by Borrower Corporate Structure

Is your valuation aligned with the practical realities of cross-border insolvency?

Earlier this year, SFNet announced its third Cross-Border Finance Essay Contest, sponsored by Goldberg Kohn Ltd. Members of SFNet’s International Finance and Development Committee judged the essay submissions on content, originality, clarity, structure and overall contribution to furthering and expanding understanding and discourse within the field of cross-border finance. This essay won first place. The second and third place essays will be published in the Jan/Feb 2025 issue.

The authors of the winning essays have been invited to participate on a panel at SFNet’s 80th Annual Convention in Houston, TX, November 13-15.

The Net Orderly Liquidation Value (“NOLV”) of inventory is highly dependent on the exit strategy employed during a liquidation, and borrower corporate structure plays a critical, but sometimes overlooked, role. This is particularly true in cross-border multi-channel business operations. Inventory stored in the distribution center has a variety of remarketing options. The same exact product would likely achieve a high recovery if sold via a retail store or e-commerce site, but might have significantly lower recovery if sold via wholesale channels or at auction. In many cases, borrower corporate structure can add legal challenges and obstacles that inhibit the realization of the ideal exit strategy that maximizes recovery. Therefore, it is critical that all of the advisors on a transaction work together to decide on a consistent approach that reflects a conservative estimation of what is likely to happen in real life. While the lender in a transaction involving a single jurisdiction has more control over the entire process and may be able to simply model the most optimal strategy to maximize recovery, a transaction involving multiple jurisdictions makes an insolvency much more difficult to control and predict outcomes.

In any insolvency, there are many stakeholders and the administrators, insolvency practitioners, or curators (or local equivalent - terms used interchangeably in this essay to minimize repetition) seek to run the process and distribute

the proceeds of the liquidation as required by the applicable laws. However, in a crossborder deal, with multiple administrators and multiple sets of conflicting priorities, it becomes even more critical to understand the differences between jurisdictions and the nuances to the process.

In this essay, we will explore the pitfalls of a liquidation of the inventory controlled by multiple administrators across various jurisdictions, and how to ensure that these complexities are incorporated into the valuation of the inventory. We will start with the definition of NOLV and explain why exit strategy is so critical to value.

Definition of NOLV – Why Exit Strategy is Critical to Inventory Value

Net Orderly Liquidation Value is defined as the estimated net proceeds which could be realized from a sale, given a reasonable period of time to find purchaser(s) with the seller being compelled to sell on an as is/where is basis.

This is generally then expressed as a percentage of the inventory at cost. An orderly liquidation of inventory involves selling the goods through the company’s existing customer base / sales channels for a reasonable period, until the stock mix deteriorates and these channels are exhausted. This can involve the company’s stores, website, wholesale customers, or any other normal sales channel. Once those channels are exhausted, goods are then sold through alternative channels, including to competitors as well as dealers and brokers at much lower recoveries. The amount of inventory projected to be sold through existing channels has a tremendous impact on the overall valuation percentage, and the exit strategy is pivotal in making this determination.

Brand Ownership and Intellectual Property

A critical aspect to corporate structure and its effect on inventory valuation is where the brand and IP ownership sits within, or perhaps outside of, the corporate structure. The ability to sell the inventory through the aforementioned sales channels is dependent on the right to use the brand. This means both physically having the signs above the doors on the retail stores, as well as the ability to use the website and promote the brand online and in print advertising.

An insolvency/bankruptcy generates a large amount of free publicity and a sense of urgency. Targeted advertising

during a liquidation focuses that urgency and leads to higher realizations. Any store or website can put up signage that says ‘stock liquidation’ or ‘everything must go’ – but without the brand name, that does not drive traffic in today’s era of intelligent and well-informed consumers. What drives traffic is the knowledge that this liquidation event is discreet and there is a relatively short window in which to purchase. The consumer is trained to then buy on impulse knowing that the product they desire might not be on the shelves the next time they visit, or the store may not even be open any more at all.

Even if the brand is owned by the main operating entity, there are often intercompany license agreements that must be reviewed to ensure ability to use the brand in other jurisdictions. In some cases, the brand may be owned by a separate holding company, one of the directors or shareholders personally, or by a third party. In this case it is critical to ensure that whole group has the right to use the brand in a liquidation, and if possible, the lender should try to obtain a charge over /lien on the brand directly as well.

Inventory Ownership and Insolvency

Another key factor in how corporate structure affects the exit strategy is which entity owns the inventory. In complex crossborder structures there may be multiple entities that each own a portion of the group’s inventory available for funding.

Below are several common structures and an analysis of how inventory ownership affects the exit strategy:

One Legal Entity – Multiple Jurisdictions

Let’s say you are dealing with the liquidation of a UK company with inventory located at a third-party logistics warehouse (“3PL”) in an EU country. In this case, the UK insolvency practitioner would be in charge of what happens with this inventory and the proceeds from the sale. In order to release the goods, the 3PL would likely need to be paid in full, but the inventory would not be subject to any insolvency proceeding in the EU as there is no legal entity in the EU. In this case it is important to account for ransom creditors in the EU including the 3PL, temp agency, security, IT/infrastructure providers, and outbound distribution or delivery services.

Multiple Legal Entities – One Jurisdiction

Another structure that can complicate the process even without being ‘cross-border’ per se, is a group structure with multiple legal entities within one jurisdiction. Certain items, such as retention of title, employee claims, taxes, or other statutory elements have preferential treatment over a secured lender, depending on the jurisdiction. Some borrowers use corporate structures to attempt to mitigate these issues. One example might be to have a buying entity that procures the inventory and a separate sales entity that sells to the customers. The thought process behind this strategy is that

these structures could negate certain preferential claims, but for the most part these have yet to be tested and are likely to be challenged. Another consideration to watch for when there are multiple entities is that items, such as the prescribed part in the UK, which is capped at £800 thousand per legal entity, are calculated individually, not at the group level.

Parent Company with Global Subsidiaries

In a scenario with a parent company with subsidiaries in other jurisdictions that own the inventory, the parent company would have an administrator, and the various subsidiaries would likely be subject to the control of a local administrator in each jurisdiction if the individual entities file for insolvency/ bankruptcy locally.

It is possible that the parent administrator might have some ability to control or at least sell the subsidiaries if they were solvent in their own right and owned and controlled by the parent.

Given the uncertainty around control of the various subsidiaries around the globe and any local insolvency proceedings, it is critical that independent legal advice is sought in each jurisdiction and that this advice is shared with the other advisors and valuers involved.

Key Considerations

Here are some key considerations when you encounter these types of structures:

Registration of Local Security such as Charges and Pledges: Do you have individual legal charges/pledges registered over the assets in each individual jurisdiction? The process varies extensively by country and local expert legal advice is required.

Control: Who are the directors of the local subsidiaries and what is their likely course of action if the parent company is insolvent?

Alternatives to Liquidation: Could the subsidiaries be sold separately as going concerns or will they need to be liquidated as part of the overall company liquidation?

Intercompany Sales Transactions: If the liquidation of the inventory relies on the subsidiaries as a distribution channel, have you factored in the possibility that the parent administrator may not allow inventory to be shipped to the other jurisdictions absent a cash payment or other special arrangement with the local administrator to ensure that the proceeds of sale do not get tied up in a local insolvency proceeding and never make it back to the parent?

Intercompany Retention of Title: Is there intercompany retention of title that could be enforced to draw inventory back to the main jurisdiction of insolvency? If so, what are the costs of shipment and is the exit strategy from the valuation aligned to this methodology, as you would lose the customers or sales channels in the EU subsidiary

jurisdictions?

Bargaining Chips: If drawing the inventory back to the main jurisdiction is not the most efficient option, could the simple threat of such action be used as a bargaining chip to persuade the administrator/curator in another jurisdiction to come to the table and allow the preferred strategy to take place? Are there other bargaining chips, such as rights over the use of the brand name, that can also be utilized to control the outcome of the local insolvency proceedings?

Other Considerations: While not the scope of this essay, there are many other considerations on a cross-border facility as well, such as whether the financing is a group facility or individual local facilities?

Example: Multiple Legal Jurisdictions

Let’s look at a scenario with a UK company with a UK distribution center and an Irish subsidiary that owns EU inventory located in a 3PL in Poland. In this case, the inventory in the UK is subject to normal UK insolvency proceedings, but the inventory located at the 3PL in Poland is owned by the Irish legal entity and would be subject to Irish insolvency proceedings and preferred creditors. In Ireland, for example, lenders might typically reserve up to three months employee costs, whereas in the UK it is generally reserved at £1 thousand per employee. Based on this structure you would also need to account for ransom creditors in Poland and the rest of the EU, including the 3PL and various other EU entities that might have control over the inventory or inhibit its distribution.

Example: Pan-European Omni-Channel

Suppose you are dealing with an omni-channel retail chain headquartered in Sweden with multiple subsidiaries across the EU, and the highest recovery channel would be to sell the inventory through the retail stores in the various jurisdictions. The valuation of the inventory might rely on these retail stores across Europe to liquidate the product; however, the bulk of the inventory is stored in a distribution center located in Sweden. If the Swedish administrator does not allow the inventory to leave Sweden, this jurisdiction alone may not have the capacity to sell all the product from the distribution center without massive discounts. This must be factored into the valuation if this is decided to be the most likely outcome.

This is an illustration of the potential disconnect between the valuation and reality. A valuation based on the most efficient recovery may have assumed that goods would continue to flow from the distribution center into the stores over the course of the liquidation period, while in reality, the flow of goods leaving the country may be halted.

In a case such as this, inventory in Sweden is part of the parent company bankruptcy, but each of the individual subsidiaries in other EU countries are subject to their own insolvency process, each with its own administrator and legal challenges to security over the inventory. If pledges are not

properly registered by the lender in each jurisdiction, the inventory in these jurisdictions will not be part of the estate of the parent company. The parent company may be able to sell the individual subsidiaries as going concerns but may not be able to force the entities into insolvency, even if it was desired, if the legal entity in each country is not individually insolvent.

Retention of title clauses written into intercompany terms and conditions can help to mitigate this problem, as can the control of the brand. It’s important to note that the country with the distribution center might have significantly more inventory than can be sold through its own stores in a reasonable (or legal maximum) amount of time, and the most advantageous way to dispose of the inventory would be a liquidation through the retail stores across the EU. This can only be coordinated if you have control over the process in each of the individual EU jurisdictions.

Slow-Moving Inventory

Another common disconnect between valuation and reality could be the time period. There are certain industries and jurisdictions where longer sale terms are quite common, in the US for example. Perhaps the valuation assumes a sale term of six months, as that would maximize overall net recovery. The problem is that in some jurisdictions there are stringent limitations. For example, in the Netherlands landlords are only obligated to allow use of the facilities for up to 90 days, and employees are only obligated to work for up to six weeks. In such cases an extended sale is simply outside the practical reality of an insolvent wind- down without some sort of alternate strategy involving temp agencies for the staff and new short-term leases with the landlords, all of which complicate the process and reduce the certainty around the outcome.

Changes to Legal Framework and Harmonization of EU Restructuring

There is a movement across the EU to harmonize the restructuring process, which has led to the creation of new regimes such as the English Scheme of Arrangement or the Dutch WHOA. While these have been relatively recently introduced, we have now had examples of cross- border cases, and the case-law established will help to clarify the mechanics of these over time. While a discussion of the mechanics of this type of scheme is outside the scope of this essay, this topic should be followed closely as it relates to any exit strategy planning going forward. Other recent developments include the change in Italy from a possessory lien (such as in Switzerland and others which requires possession of the inventory to perfect the pledge) to a non-possessory lien. This general shift has in many cases been favorable to asset-based lending, but not always.

Conclusions

Corporate structure can have a significant impact on the exit strategy and therefore the valuation of the inventory.

The right to use the brand name and intellectual property is critical to the exit strategy and valuation of inventory.

The knowledge of which entity or entities own the inventory and how it fits into the overall corporate structure is crucial to the exit strategy and valuation.

In any case where multiple jurisdictions are involved, a knowledge of local security and insolvency law is necessary.

It is essential to work together with all advisors to the transaction to ensure a seamless process and consistent results.

A review of existing portfolio clients can help to evaluate whether the valuations in place are in line with the practical realities of cross-border insolvency.

On new business transactions, it is critical for the valuer and the lender to work closely with the legal advisors, restructuring advisors, field examiners, underwriters, and the rest of the deal team. Identifying the key issues and roadblocks early in the process and communicating those amongst the various advisors helps to avoid disruption to the process and helps to ensure there is on-going sufficient collateral to cover the lender’s funding exposure in the event of a cross-border liquidation.

Limitations

European Valuations (“EV”) is not a legal advisor and Dan Edgar is not a lawyer. This essay should in no way be construed as legal advice. EV recommends all parties to seek independent legal advice in every jurisdiction relevant to any transaction.

The examples mentioned are not exhaustive. There are other risks that might have an impact like extended retention of title from suppliers, consignment stock, right of return, advance payments, and many others. This varies on case-by-case basis and often on the nature of the business.

Across Europe there are a wide variety of terms for the individuals appointed by the court to run the insolvency or bankruptcy process, including administrator, insolvency practitioner, curator, as well as others. For the purposes of this essay these are used interchangeably in certain cases to avoid listing them all every time. Similarly, terms such as bankruptcy and insolvency process have been used interchangeably.

Dan Edgar has 17 years’ experience in inventory valuation and liquidation, with a special interest in retail. He commenced work in the United States in 2007, moving to London in 2013 to help build a new start up in Europe. Edgar is one of the founders of European Valuations, which is celebrating its 10th

anniversary this year, and also of a new start appraisal business based in the Netherlands. He has worked with companies across the world in a wide range of industries including high-fashion, fast-fashion, electronics and gaming, consumer staples, department stores, home improvement and building supplies, furniture, pharmacists, food and beverage, and other niche retail businesses. Edgar holds a bachelor’s degree in Business Economics and Global Studies, from the University of California at Santa Barbara. Edgar is USPAP certified and also a CFA charterholder.

SFNet Marketing Committee

This column highlights the hard work and dedication of SFNet’s Committee volunteers. Here we speak with Lauren Nadeau, senior director, head of Marketing & Communications at Gordon Brothers and chair of SFNet’s Marketing Committee.

LAUREN NADEAU

TSL: Please provide our readers with some background about your career.

Nadeau: When I joined Gordon Brothers, I was new to the restructuring and asset-based lending industries. The majority of my career prior was focused on marketing strategy in investment management, targeting investment advisors and individual and institutional investors. I also worked in the healthcare industry at a medical device manufacturer where I focused on B2C and B2B marketing, targeting both individual patients and the doctors who prescribed the medical devices.

I’ve held a variety of roles within marketing, including content marketing, website development, CRM and marketing automation, market research, and marketing strategy and measurement.

Throughout my career much of my focus has been on building new programs and communication platforms. At my previous employer, I launched a social media program when LinkedIn and leveraging social media for business purposes was fairly new territory and before FINRA or the SEC had provided any guidelines. Many investment management firms were nervous about participating on social, so we took a measured approach that evolved over time as the regulations from governing bodies caught up to what was happening in the space.

I also have experience with website development, CRM and marketing automation, as well as marketing strategy and measurements. I have enjoyed leveraging

my marketing background both at Gordon Brothers and in my position on the Marketing Committee for SFNet.

For someone who is reading this and interested in joining the Marketing Committee, how would you describe it to them? What does the Committee do?

Our mission statement sums it up nicely: The SFNet Marketing Committee is dedicated to elevating the value proposition of the SFNet and maximizing member satisfaction. We strive to ensure all members are fully aware of the wealth of resources available to them. The committee works with SFNet staff and advises on strategies to help drive effective segmentation, optimized communications and cross-channel promotion to amplify awareness and engagement with SFNet’s professional development, data resources, networking opportunities and advocacy efforts while bolstering SFNet’s brand equity and driving sustained value for all stakeholders.

This past year we focused on how we can elevate brand awareness, increase member engagement with offerings, and demonstrate member value. We spent time speaking with SFNet staff and the different committees about their current challenges and how can we help them communicate better, whether it’s regarding the SFNet education offerings and professional development, advocacy, or conferences and events. SFNet has expanded significantly over the last seven or eight years, so we found members aren’t necessarily aware of all that is available to them and, at the same time, have a lot of information flying at them.

We’ve started looking at the overall SFNet communications strategy and how all the different levers work together. Between e-mails, social channels, live events, the website, we tweaked strategies to align with the broader organization, which will carry into next year.

How often do you meet? How much time would you say is involved if someone is a member of the Committee?

We meet once a month for an hour and ask Marketing Committee members to actively participate in our discussion. Occasionally, we may members to look at something outside of the meeting and give us feedback.

In addition to meeting monthly, members can serve as a liaison with other SFNet committees and help them with their communications. For example, Augusta Melendez of FGI has become more involved on the SFNet education front with the guest lecture program, and Gordon Brothers’ Kevin Creedon has volunteered for the 2025 Emerging Leaders Conference and committee communications.

It’s not required as part of the Marketing Committee, but an additional volunteer opportunity for people to get more involved in a communications capacity with some of the other committees.

In working with the Marketing Committee members, have you noticed any trends, common themes or challenges?

Many of the challenges we are looking to solve for SFNet are similar throughout the industry. Not only do our members speak to the communications challenges they are facing at their own companies, but help us understand what is valuable to their member base.

One of the common threads we have heard throughout the year, particularly on the banking side, is that companies are tightening expenses and are more mindful of travel. We then look at how this affects SFNet in terms of conference attendance and other in-person programs, and what we should be thinking about in terms of communications.

In addition to some common challenges, a theme that comes up for us is time. Since there’s a seemingly ever-decreasing amount of free time available, we focus on how to cut through the clutter to get people’s attention. We hone in on where people are most likely to get information from, what kind of information they are looking for and how we can communicate in a way that is most effective.

The communications challenges we are all facing with our respective audiences include the increasingly strict platform guidelines, privacy policy regulations in different states or countries, and additional security measures that individual companies are instituting to protect themselves, which in turn can make email communication more difficult.

Although e-mail is the preferred tool of our members, it’s also becoming much harder to reach them because of all the enhanced security measures in place, both at the company and domain level based on the email provider.

What do you enjoy about being on the Committee?

I enjoy meeting with peers across the industry and hearing about the different challenges they’re facing or opportunities available to them. I believe information sharing and collaboration is not only helpful to SFNet, but also for myself and the broader committee to hear how we can collaborate to solve business challenges.

It’s gratifying to see our committee members feel similarly. In the recent SFNet Committee Volunteer Survey results, all the committees scored highly from those that took the survey including the Marketing Committee. The members who work with us enjoy the experience and tell us we provide what they were looking for in terms of communicating with peers and feeling like they are valued and appreciated for their input.

What are your goals for the Committee in the coming year?

The biggest goal is continuing to accelerate the work around the broader communication strategy and platform to increase member engagement and demonstrate member value while elevating branding awareness.

We’ve done quite a bit of work looking at email this past

year. SFNet staff rolled out a new email platform over the summer, and we are looking at how we can better frame those communications. We’ll also be looking at integrating communications across email, social media and the website with the goal of getting the information and fantastic offerings SFNet provides members while making it easier to find this information.

Additionally, in the coming year, we will look at how we spread awareness more broadly, not just for SFNet, but for the secured finance industry. Whether advocating nationally or within state legislatures, we want to make sure people understand our industry, who SFNet is, why our industry is important and how it differs from the more traditional investment management side of the world.

When you’re not busy at Gordon Brothers or SFNet, what can you be found doing?

I’m usually running around with my family. I have two young children, so my time revolves around getting them to their various activities. I also love to travel and explore new places when we can squeeze in the time.

Eileen Wubbe is senior editor of The Secured Lender.

Maria Kerr, Novo Advisors

SFNet 2024 Marketing Committee Members:

Lauren Nadeau, Gordon Brothers, Chairperson

Karen Bubrowski, Hilco Global

Kevin Creedon, Gordon Brothers

Hamish Davidson, JS Held

Stan Grabish, Huron Consulting Services

Robert Hanna, Cohn & Dussi

Maria Kerr, Novo Advisors

August Melendez, FGI

What did you enjoy about being on the Marketing Committee in 2024?

As part of a small marketing team, I have really enjoyed using this committee as a space to collaborate with other creative professionals. It’s been incredibly valuable to exchange ideas and gain insights into the latest trends and strategies within our industry from a marketing perspective. This opportunity to brainstorm with like-minded individuals has been a refreshing way to broaden my approach.

What would you like to see the Committee accomplish in the coming year?

I’m excited to see the new developments in our social media and email strategy. With the growing importance of social media, especially in the B2B space, it can be challenging to find the most effective ways to leverage it. I’m eager to see how we can continue to innovate in this area for SFNet and drive meaningful engagement.

How has being on this Committee helped you in your own job?

Although I’ve been in marketing for over 14 years, I’m relatively new to the finance industry. Serving on this committee has been instrumental in expanding my understanding of both the industry and the types of content our audience values. It’s helped me tailor my content creation to better meet the needs of our field and enhance my contributions in my current role.

Augusta Melendez, FGI

What did you enjoy about being on the Marketing Committee in 2024?

SFNet is an incredible resource for our industry. From Events and Education, Industry Data and Publications, to Networking and Advocacy, SFNet is constantly creating opportunities for members to engage and learn. As a part of the marketing committee, I have enjoyed discussing and planning communication strategies to create awareness of the many offerings available to members and advance the initiatives that bring so much to the secured lending community.

How has being on this Committee helped you in your own job?

Collaborating with other marketing professionals has been a highlight of my time on the Committee. There are nuances in secured lending that impact marketing in the space, and it has been an excellent opportunity to discuss ideas, perspectives, and best practices with so many talented marketers from around the country.

BEYOND SECURED FINANCE

Faces of Freedom

Walter Schuppe, formerly of Pacific Western Bank, started Faces of Freedom in 2019 to express gratitude to and honor the sacrifices and service of U.S. Military veterans and their families. The project uses black and white portraits and oral histories, as told by each veteran, to help connect a face with a personal story.

WALTER SCHUPPE formerly of Pacific Western Bank

Walter Schuppe had been SVP/managing director Special Assets Group at Pacific Western Bank and retired in early 2024 to tackle home projects and other tasks that were put off. His career spans working in public accounting, middle-market lending at Dai-Ichi Kangyo Bank, and Fleet Bank, general manager for a metal stamping company, asset-based lending with FleetCapital, and asset-based and cash flow lending for CapitalSource, which ultimately merged with Pacific Western Bank and then Bank of California.

These days Schuppe keeps busy running Faces of Freedom and serving as a board member and treasurer of SEALKIDS, a charity that raises money to help children with diagnosed learning disabilities who are children of U.S. Navy SEALs. The charity is in the process of expanding to all special forces. He assists the executive director with the financials, forecasting and strategic planning. Schuppe also volunteers his time teaching financial analysis for the Veteran Entrepreneurial Training & Resource Network (VETRN), a group sponsored by the SBA, for veterans who have a business and decide that they would like to get more training and a mini-MBA. VETRN was founded and is run by Lee Goldberg who Walter knew from his banking days.

Schuppe recalled his 60th birthday as a turning point that spurred him to begin Faces of Freedom.

“When I turned 60, it was the only birthday that I ever really stopped and thought a lot of time has transpired and I have been lucky,” he said. “I never had to make any significant sacrifices like those in the military. I wondered what I could do to show a little gratitude. Photography is a hobby of mine, and I thought narrowly and modestly, and felt I could take photographs of WWII veterans. I had an interest in World War II, anyway.”

Getting Started

Schuppe decided to seek out World War II veterans and photograph them as a gift. Photos were, and still are, printed in black and white, which Schuppe said looks more dramatic, and everybody receives an 8x10 photo that is matted and framed with a label on it including the details of their time of service, at no charge.

Schuppe recalled being in North Carolina for work, and his wife joined to visit for a vacation afterwards. They decided to drive to Raleigh to meet the first veteran, William Simpson, who earned three Purple Hearts, a Bronze Star and three Battle Stars.

“I figured I’d snap a couple of photos, chat with him, and then we’d be on our way. Three and a half hours later I had to say to him, ‘I could sit here all day and listen to your stories, but we really need to get on the road.’ I ran out to the car and sat there with my phone typing in everything I could remember and thought ‘Maybe there’s more to this than I realize. Maybe it’s a photo and an interview.’

“I once interviewed eight people on a Saturday and went back another time and interviewed 16 in a day. That was lot!” Schuppe said. “While I was preparing for this trip, I got an email from Janis Allen who works with World War II veterans at the museum who had written an article about an interview she had with Brad Freeman, who was the last surviving member of the Band of Brothers.

“She gave me his phone number and I called him. He said, ‘Come on down.’ After all those interviews in Brevard, my wife and I drove to Caledonia, Mississippi the next day and interviewed Brad. When we went into his house, it was like a giant memorial to the 101st Airborne Division Easy Company.”

World War II veterans who have been interviewed and photographed for Faces of Freedom. Brad Freeman is top left and Clem Leone bottom right.

“You never know what to expect when you interview somebody. I’m going in blind. I usually don’t have very much information in advance. So, if somebody’s agreed to do the interview, they’re probably a talkative person. I don’t end up having to ask many questions sometimes.”

Finding veterans to interview was harder than expected. Schuppe would tell people what he was looking for and, through word of mouth, lined up more interviews. If he reads about someone or sees a veteran on TV, he will look them up and track them down. Everybody interviewed understands that Faces of Freedom is a feel-good project to show gratitude and there is no cost. Those who are interviewed can review their draft to make changes or corrections so that they are satisfied with what’s written.

Schuppe had success in reaching out to The Veterans History Museum of the Carolinas in Brevard, NC for potential interviews. Much to his surprise they had a disproportionate concentration of retired veterans there and many World War II veterans. He sent the museum an email telling them about the project and asked if they knew of any veterans that might be interested and they replied within an hour offering to help.

125 Stories and Counting

While not all veterans have stories of taking the hill, kicking down doors and clearing rooms or bombing missions, everybody deserves to have their story told because they sacrificed their time and things could have unexpectedly gone horribly for them, Schuppe noted. A few veterans’ interviews came to mind when asked if any in particular stood out.

“Jim Brush was part of The Manhattan Project,” Schuppe said. “He worked on the development of the world’s first atomic bomb, with a focus on the development of the timing for the firing mechanisms. Clem Leone was a radioman on a B17 and flew missions over Europe. He has a pretty long story about being shot down in Holland and trying to be smuggled back through Belgium and into France and Spain to then get him back to England. The network got compromised somewhere in France, so he ended up a POW. Masters of the Air , an American war drama miniseries on Apple TV+ follows what they call The ‘Bloody 100th’ Bomb Group. There is one episode about Clem’s story.”

Schuppe also recalled interviewing George Steitz, who was part of the first wave that landed on Utah Beach; a woman who was Ruth Minsky in the United States and Riva Minska in Poland, who was a survivor of a satellite camp of Auschwitz; Colonel Harvey Barnum, who was awarded the Medal of Honor in Vietnam; Bill Guenon, a pilot that was part of The Son Tay Raid in Vietnam, and a young Marine who helped

with the American troops withdrawal in Afghanistan and was next to Abbey Gate, where the bomb went off at Hamid Karzai International Airport in Kabul.

Schuppe has also interviewed several SEALs, including one he met at a SEALKIDS event, who witnessed Khalid Sheikh Mohammed confess to killing The Wall Street Journal reporter, Daniel Pearl.

“He invited me and a few others from the event to workout in his garage that he turned into a workout room,” Schuppe recalled. “He had all these pictures on the wall that I started asking him about. A few were photos of the psychologists he worked with at CIA Black sites. He explained that he guarded Mohammed after he had been captured, shuttled him around to all the CIA Black sites and was there when he confessed to killing Pearl.”

One of the more recent interviews Schuppe conducted was after seeing Mae Krier receive the Congressional Gold Medal on TV this past spring. They were honoring a group of women who played a role as a Rosie the Riveter, and Krier, an original Rosie the Riveter who built planes during World War II, accepted the Medal, on behalf of all Rosies. Schuppe tracked her down online. It took a few messages and letters and eventually she answered. The interview was conducted over

Zoom. Schuppe then went to Levittown, PA to photograph the 98-year-old, but that still took some convincing.

“She eventually said, ‘All right, well, you can’t stay long, 20 minutes.’ I said I’d just take a couple of pictures quickly. I went down there and was there for two and a half hours. We chatted about everything under the sun.”

Schuppe eventually wants to turn Faces of Freedom into a 501(c)(3) to raise money to allow more flexibility in traveling to veterans that are outside of driving distance from his hometown in Avon, CT. “Remember, every veteran has a story that deserves to be told,” he said.

If you are a veteran or know of a veteran who would like to be featured, contact Walter at walter11_22@yahoo.com. For more information, visit www.facesoffreedom.us.

Eileen Wubbe is senior editor of The Secured Lender.

STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION

Required by 39 U.S.C. 3685. 1. Title of publication: The Secured Lender. 2. Publication No. 0888-255x. 3. Date of filing: October 1, 2024. 4. Frequency of issue: 6x a year. 5. No. of issues published annually: 6s. 6. Annual subscription price: $65 for nonmembers. 7. Complete mailing address of known office of publication: 370 7th Ave. Ste. 1801, New York, NY 10001. Contact Person: Michele Ocejo, Telephone: (212) 792-9396. Complete mailing address of the headquarters of general business offices of the publisher: 370 7th Ave. Ste. 1801, New York, NY 10001. 9. Full names and complete mailing address of publisher, editor, and managing editor: Publisher: Secured Finance Network, Inc. 370 7th Ave. Ste. 1801, New York, NY 10001; Editor-in-Chief: Michele Ocejo, 370 7th Ave. Ste. 1801, New York, NY 10001; Managing Editor: Eileen Wubbe. 10. Owner: (If the publication is owned by a corporation, give the name and address of the corporation immediately followed by the names and addresses of all stockholders owning or holding 1 percent or more of the total amount of stock. If not owned by a Corporation, give the names and addresses of the individual owners. If owned by a partnership or other unincorporated firm, give its name and address, as well as those of each individual owner. If the publication is published by a nonprofit organization, give its name and address.): Secured Finance Network, Inc., A Delaware Non-Stock, Non-Profit Corporation, 370 7th Ave. Ste. 1801, New York, NY 10001. 11. Known bondholders, mortgagees, and other security holders owning or holding 1 percent or more of total amount of bonds, mortgages or other securities: None. 12. The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes: has not changed during preceding 12 months. 13. Publication Title: The Secured Lender. 14. Issue date for circulation data below: September, 2024. 15. Extent and nature of circulation: a. Total number of copies (net press run): Average no. copies of each issue during preceding 12 months: 6,364; No. copies of single issue published nearest to filing date: 6,500. b. Paid circulation (by mail and outside the mail): (1) Mailed outside-county paid subscriptions stated on PS Form 3541 (Include paid distribution above nominal rate, advertiser’s proof copies, and exchange copies): Average No. copies each issue during preceding 12 months: 5,758; No. copies of single issue published nearest to filing date: 5,885 (2) Mailed in-county paid subscriptions stated on PS Form 3541 (Include paid distribution above nominal rate, advertiser’s proof copies, and exchange copies): Average no. copies each issue during preceding 12 months: 0; No. copies of single issue published nearing to filing date: 0; (3) Paid distribution outside the mails including sales through dealers and carriers, street venders, counter sales and other paid distribution outside USPS: Average no. copies each issue during preceding 12 months: 0; No. copies of single issue published nearing to filing date: 0; (4) Paid distribution by other classes of mail through the USPS (e.g., First-Class Mail): Average no. copies each issue during preceding 12 months: 30; No. copies of single issue published nearing to filing date: 150. c. Total paid distribution (Sum of 15b(1), (2), (3) and (4)): Average no. copies of each issue during preceding 12 months: 5,788; No. copies of single issue published nearest to filing date: 6,035. d. Free or nominal rate distribution (by mail and outside the mail): (1): Free or nominal rate outside-county copies included on PS Form 3541: Average no. copies of each issue during preceding 12 months: 0; No. copies of single issue published nearest to filing date: 0. (2) Free or nominal rate in-county copies included on PS Form 3541: Average no. copies of each issue during preceding 12 months: 0. No. Copies of Single Issue Published Nearest to Filing Date: 0. (3) Free or nominal rate copies mailed at other classes through the USPS (e.g., First-Class Mail): Average no. copies of each issue during preceding 12 months: 0; No. copies of single issue published nearest to filing date: 0. (4) Free or nominal rate distribution outside the mail (carriers or other means): Average no. copies of each issue during preceding 12 months: 200; No. copies of single issue published nearest to filing date: 300. e. Total free or nominal rate distribution (sum of 15d (1), (2), (3) and (4): Average no. copies of each issue during preceding 12 months: 200; No. copies of single issue published nearest to filing date: 300. f. Total distribution (Sum of 15c and 15e): Average no. copies of each issue during preceding 12 months: 5,988; No. copies of single issue published nearest to filing date: 6,335. g. Copies not distributed: Average no. copies of each issue during preceding 12 months: 376; No. copies of single issue published nearest to filing date: 165. h. Total (Sum of 15f, 15g): Average no. copies of each issue during preceding 12 months: 6,364; No. copies of single issue published nearest to filing date: 6,500. i. Percent paid (15c/f x 100): Average no. copies of each issue during preceding 12 months: 96.65%; No. copies of single issue published nearest to filing date: 95.26%. I certify that all information furnished on this form is true and complete.

Bob Zadek’s Homecoming: A Celebrated Journey Through Secured Finance

Many in the secured finance industry know or have worked with Bob Zadek over the years, whether at an SFNet Convention or having read at one time his column, You Be the Judge, that ran in The Secured Lender. Here Zadek looks back at an industry he has worked in for nearly 60 years and discusses his firm, Lenders Funding, a private funding and risk-sharing source for factors and assetbased lenders.

BOB ZADEK Lenders Funding

A Walk Down Memory Lane

The year was 1967. It was Bob Zadek’s first Annual Convention. Back then it wasn’t the Secured Finance Network or the Commercial Finance Association, but rather the National Commercial Finance Conference, Inc., (NCFC). Eli Silberfeld was general counsel, Leonard Machlis was the assistant secretary and the NCFC office was at 120 Broadway in downtown Manhattan. The Association’s publication at the time, (pre-The Secured Lender magazine), in which Zadek wrote his nearly 100 columns, was mimeographed and stapled.

“The first annual meeting outside of the country was in Puerto Rico in 1982, and I was president of the Association of Commercial Finance Attorneys,” Zadek recalled. “ACFA was and still is the attorney group that represented the SFNet members at that time and put on an original musical show on stage for the members. Written by William Barnett, then at Herrick Feinstein LLP, it was a musical review of, and roughly followed, an off-Broadway show which was popular for a few years called Steambath.”

Zadek has also taught for SFNet, offering a two-day course titled “Negotiating, Drafting and Enforcing Asset Based Loans.”

“One of the honors of my life was receiving the Harry H. Chen Award for Excellence in Teaching at the Annual Convention,” Zadek recalled. “I still have the plaque on my wall. At the award presentation I got a chance to publicly thank a few industry leaders in the audience who taught me credit and lending law, at the annual convention. We are the product of those who teach us. I can vividly remember that day and even what I was wearing -- a blue sports jacket and red tie. It might have been the last day I ever wore a tie in my life, I’m not sure. It was an important day for me. To be honored by your peers is special.”

Another experience Zadek recalled was being part of

a committed group of lawyers who worked on the revision to the Uniform Commercial Code (UCC) in the late 1990s. The project took 15 weekends over a four-year period.

“There’s a sentence of the UCC in section UCC 9-406 that I drafted, and it was included at my specific request. There are members of Congress that don’t get a chance to do that, but I did it and I will never forget that experience.”

Getting Started in the Industry

While Zadek was in his third year of law school at NYU at night, he worked as an accountant during the day. As a junior accountant he audited Leumi Financial Corporation, a subsidiary of Bank Leumi, and SFNet member at the time. He left public accounting and went on to be the controller for Leumi Financial.

“At law school I was taught secured lending by Professor Homer Kripke, a member of the original UCC drafting committee. Thus, I was taught the UCC by someone who wrote it. Professor Kripke was inspirational. I fell in love with the UCC and knew I wanted to do this my whole life; and that is just what I did!” Zadek said.

Professor Kripke introduced Zadek to Herb Rubin at Walter E. Heller & Company, a Chicago-based factoring company started in 1919. Rubin hired Zadek as the second lawyer at Walter Heller’s New York office, working with Dan Gutterman who was also SFNet’s general counsel.

“I started back in 1966 and have never left,” Zadek said. “I have been doing factoring and asset-based lending since then all because I took a course from the most inspirational man I’ve ever met, Professor Kripke. I have had every job in commercial finance a human being can have. I was a CPA auditing an SFNet member; I was a controller for an SFNet member; I worked at Otterbourg P.C.; I worked at Kreindler & Relkin; I was in-house counsel for Crocker National Bank in San Francisco shortly after it purchased United Factors out of its bankruptcy. For almost my entire life, though, I was a lawyer in the secured lending industry. In 2000, I formed Lenders Funding. Rejoining SFNet with Lenders Funding is almost like a homecoming for me.”

Lenders Funding: Purchasing Participations and Serving as a Sounding Board

The origin of Lenders Funding stemmed from Zadek receiving two phone calls in one Friday morning from Buchalter clients who were each seeking participants for large factoring transactions.

“I said to myself, ‘Wow, I wish I had money; I would buy the participation. Maybe I’ve spotted a need.’ I went to the office that weekend and drafted a business plan for Lenders Funding. I knew besides maybe having found a niche, I also had to correct an injustice. I realized as a lawyer I was selling hours, and you only have a certain number of hours before you run out of hours. As a lender you haven’t got those limitations. So, I had to try to make as much money as my clients were, and the only way to do it was by becoming a lender.”

Lenders Funding consists of Zadek, John Benkovich, chief operating officer, and Jean Madden, controller. This small team is fitting for Zadek, who refers to an acronym he calls PERC that governs his

business life.

“PERC describes everything to be avoided in business since each is too exhausting and too time consuming, and together they could kill you,” Zadek explained. “The acronym stands for Partners, Employees, Risk, and Competition. Lenders Funding avoids PERC, or at least tries to. Lenders Funding has never had more and never less than three people. The right three people are adequate to carry out every function needed.”

Celebrating his 32nd year at Buchalter and 25th at Lenders Funding, Zadek says he works “full-time squared” at about 70 hours a week with rarely a day off.

Lenders Funding is a lender’s source of funds and absorber of risk.

“Lenders and factors might need money. Business is good, they have a bank line which has become fully employed. Same with their sub debt. Business is booming. It’s a crime against nature to ever lose a sale due to lack of funds. A participant, such as Lenders Funding, is available to help lenders and factors continue to market when their fund’s money runs out. We buy portions of transactions, earning a tad less than the lender or factor, which is only fair since they brought the transaction to us, and they are doing the work. I provide the lead with money so the lead can continue his gangbusters marketing effort while the lead is raising new funds.”

Senior lender concentration limits also create a need for Lenders Funding, since the lender can sell “risk” to keep a large transaction while remaining in covenant compliance. Lenders Funding believes it adds value to the transaction with its collective 100 years of credit and legal experience.

“Sometimes the lead is considering the transaction and is looking around for participants and they will call us asking us to participate,” Zadek explained. “If we decline, that might be an indication to the lead that maybe they should decline as well. We perform as a sounding board, and we sometimes save lenders from themselves.

“If you know what you’re doing, you only lend to businesses you understand,” Zadek added. “The business I understand is lending, so I lend to lenders because I understand them. We can provide a line of credit to lenders as long as we understand the business model. We don’t panic when credit becomes dicey. We know what we’re doing. We are more expensive than banks, and not a replacement for bank; just a supplement. It’s a niche we fill, and so long as we’re smart and we’re sensible, we’re a good partner in business transactions.”

“I have two full-time jobs: lawyer and lender (if you are fond of alliterations, you may add lecturer and libertarian)” Zadek noted, “As of counsel at Buchalter, I negotiate transactions and draft documents, but do not litigate. I don’t go into courtrooms, although I’ve been retained as an expert witness in about 40 litigations, and I get a chance to be in courtrooms and interact with judges and occasionally a jury. To me it is highly satisfying to be an expert. Being called an expert in a trial, and actually qualifying as an “expert” in lending is, for me, life-affirming. I love what I do, and I can’t stop. When you discover why you are here, and you seem to be good at it, it is not possible to stop.”

Tauber-Arons: Four Generations of Leadership and Innovation in Auctions

Tauber-Arons Auctioneers is the oldest and longest-running auctioneer in the industry. Owned by four generations, the firm recently re-joined SFNet and plans to continue its legacy.

TONY ARONS

Tauber-Arons Auctioneers

Founded in Chicago in 1892, Tauber-Arons, an auctioneer and appraiser in the industrial manufacturing world, has been owned and operated by the same family for four generations.

Founder Michael Tauber was based in Chicago and married into the Arons family. His brother-in-law brought the business to Los Angeles in the 1920s. The company name then changed to Tauber-Arons. While there are no longer any Taubers they kept the name due to its history. The third generation of ownership is credited for taking the company to the level it is today.

“It was really my dad who brought Tauber-Arons to where it is for the last 60 years or so,” said Tony Arons, CEO and president. “My father took over the business out of necessity. His father passed away young, and his brother had moved up to the Pacific Northwest. My dad was just out of the Army, took over, ran with it and did great. He really focused on machine shops during the aerospace boom in Los Angeles, because there was a glut of them here, and that’s what grew Tauber-Arons throughout the 1970s and 1980s.

“I’ve always had a great relationship with my father, and it seemed natural to follow him into the family business. I had worked for him, whether it was cleaning machines, going to auction sales, or pushing a broom, so it seemed like the natural thing to do once I graduated college. I also liked the history of it. I knew getting into a fourth-generation business was a rarity and I was proud of that. Thirty years later, here I sit.”

TA Appraisal operates out of the same office as Tauber-Arons and provides appraisals for the lending industry. TA Appraisal is owned and operated by Steve Quale over the last 30 years. Quale also negotiates auction contracts solely for Tauber-Arons, who he has

worked in conjunction with for the last 40 years.

“Our theme is ‘if we get you into a deal with our appraisal, we will get you out of it with our auction company,’” added Quale.

Fifth Generation on the Horizon Tauber-Arons will soon be joined by the fifth generation. Carson Arons, who will graduate in May 2025 from the University of Oregon Lundquist College of Business, plans to join the firm. Tony said Carson has followed in his footsteps, helping clean machines while home on summer break from college. Tony’s daughter, currently attending the University of California, Berkeley, is an aspiring lawyer and plans to attend law school and wants to eventually join the firm as counsel and a deal maker, Arons said. One son chose a different path, having graduated from Arizona State and now works in the restaurant business.

Arons, in partnership with Steve Quale, also started Industrial Funding Group (IFG), a finance division at Tauber-Arons in 2004, which helps companies leverage equity in owned machinery and equipment to meet challenging financial needs.

“We’re now a full-service industrial financial company,” Arons said. “We appraise, we lend, and we auction. We handle it all.”

Tauber-Arons is also one of the 30 original members of the Industrial Auctioneers Association, the world’s first and only association composed solely of industrial machinery and equipment auctioneers.

One of the more dramatic changes for the industry has been the dawn of the online auction, versus a live one on site.

“The next generation is never going to have to call a live auction sale, which is a shame. That is what I grew up doing and what my dad always did,” Arons said. “I’ve had to make this adjustment to these timed online auctions where we never do anything live anymore. We never do anything onsite or call an auction sale. In our world, and the world SFNet’s membership lives in, it’s all sold online now. The live auctions where we had several hundred people in a machine shop were really fun. I don’t want to say the online version is not as fun, but it is not as social or as exciting. But times change, so we adapt. In fact, we were the first ones to do an auction sale broadcast live online about 25 years ago. We would do a live sale onsite and broadcast it on the internet so people could sit at their desk and hear the auction being conducted.”

Going Once, Going Twice

The typical auction process begins with Tony doing a visit to the facility to speak with the owner. There he provides estimates of the value of their assets and what it will cost to get it sold for them.

In doing appraisals for lenders, Arons said older equipment is no longer worth much and it can cost more money to remove it. Newer equipment sells well because you can get it the next day and there is no delivery or wait time. Tauber-Arons will handle

advertising and a labor and setup crew prepares for the auction.

“Our labor and setup crew are second to none. I have the best crew in the country bar none,” Arons said. “Many auctioneers have recently come into the business because of the ease in which auctions can be put online. Some will have to hire outside crews to clean the facility, develop the catalogue and take pictures to get it ready for auction, but we have our own crew that have been with me for 35 years. We do not use any outside labor or adverters. We handle everything because it’s how we’ve always done it, and it is the best way because they know what they’re doing.”

Tauber-Arons transforms a factory space to look like a showroom for when people come to inspect the equipment. They will also stay on site a day after the auction sale day to collect invoices and money as well as make sure the buyers get what they paid for, and it’s removed properly.

“We turn it back to the property owner in immaculate, broomswept condition. That’s my crew that I’ve developed.”

Auctions can draw anywhere from 75 to more than 1,000 registered bidders depending on what is up for sale and the quality of the asset. Online sales continue to make it easier for people to participate.

Certain auctions stand out more to Arons than others. Recently, a tortilla manufacturer’s machinery had an opening bid of $25,000, and after almost five hours of bidding, sold for $375,000. The lot stays open past closing time for competitive bidding.

“I think the incoming fifth generation is going to bring even more modernization to Tauber-Arons,” Arons said. “Manufacturing will always be around and so will the auction business and we will continue to adapt and be on the cutting edge of technology. Just because we have been in business for 132 years, doesn’t mean we are stuck in time.

Wubbe is senior editor of The Secured Lender.

Bridgeport Capital: 25 Years of Empowering Businesses to Reach Their Full Potential

Demonstrating a solid track record of helping businesses get the funding they need, Bridgeport Capital celebrates its 25th anniversary this year. Its leadership team consists of CEO and founder Mark Rosenstein and his son, Jason, president, and Max Toledo as executive vice president and CMO.

MAX TOLEDO

Bridgeport Capital

Bridgeport Capital Funding, which was founded in 1999, provides flexible financing solutions to meet the unique needs of businesses in the factoring industry. It strives to provide a comprehensive suite of financial services and, at its core, provides accounts receivable factoring.

Bridgeport Capital’s story is rooted in adaptability and entrepreneurial spirit. Back in the 1970s and 80s, founder Mark Rosenstein navigated the challenges of New York City’s garment industry, where he ran his family’s clothing business until he ventured out on his own to form his own clothing company. Unfortunately, the late 1970s and early 1980s were a hard time to be in the garment industry. The industry faced relentless pressure from rising international competition, labor disputes, and urban redevelopment. In this environment, factoring emerged as a crucial tool for clothing manufacturers to maintain healthy cash flow, a lesson Mark carried forward throughout his business career.

A chance lunch meeting with Leon Fishman, owner of Allstate Financial, would prove pivotal for Rosenstein. He began utilizing Allstate’s services to address his own working capital needs and quickly recognized the potential of factoring. Rosenstein saw the value of having a working capital credit facility that was fast, easy, and flexible, it was the perfect match to help solve the working capital needs of any company. Inspired by this financial tool, Rosenstein decided to embark on a new career path, learning the intricacies of factoring under Leon Fishman’s guidance.

In 1999, he launched Bridgeport Capital with his son, Jason. Together, they built the company over 25 years, establishing a strong foundation for growth. Today, with Jason at the helm, Bridgeport Capital has become a leading player in working capital financing, continuing its legacy of innovation and success.

“We embody the belief that change is constant,” said Max Toledo, executive vice president and CMO. “We strive

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for proactive adaptation, creating opportunities in times of flux. While family-run at its core, we’ve also built a team of experienced professionals who understand the factoring industry and cash flow challenges, fostering a company culture dedicated to providing topnotch client service.”

“Joining Bridgeport Capital was a great day in my life that I did not expect to happen,” Toledo explained. “The firm I was with several years ago had massive layoffs and closed offices. I was in the final wave of those layoffs. It was December and a Thursday. I was thinking ‘It’s time to be proactive and start making calls.’ Mark and Jason Rosenstein, the founders of Bridgeport Capital, reached out to me and we set up an appointment for the next morning at 9 a.m. I started the following Monday and, as they say, the rest is history, an excellent history if I may say so.”

In the factoring industry, one size does not fit all, and each industry has unique cash flow challenges. Bridgeport Capital Funding prides itself on offering specialized factoring solutions tailored to specific industries, whether it’s in staffing, transportation or manufacturing.

“It’s all about giving borrowers the tools and support they need to optimize cash flow, grow the business, and succeed in a competitive market,” Toledo explained. “For staffing companies, for example, Bridgeport offers payroll funding, which can take the pressure off when waiting for client payments to ensure payroll obligations are met without hiccups. We can also assist with bookkeeping and back-office support and help with services such as credit checks on potential customers.”

Toledo said Bridgeport Capital has an unwavering commitment to being a reliable partner for businesses navigating the complexities of working capital financing and it’s what separates it from the competition.

“We’re more than just a factoring company; we’re a financial partner, guiding businesses toward financial stability and growth. Our three pillars — fast, flexible, easy — are the foundation of everything we do,” Toledo added. “We understand that time is money. That’s why we prioritize lightning-fast funding, getting you the cash you need when you need it most. We recognize that every business is unique, so our solutions are tailored to their specific needs and circumstances, providing the adaptability and we believe that accessing working capital should be simple and stress-free. Our streamlined processes and dedicated support team ensure a smooth and hassle-free experience from start to finish.”

Industry Trends Shaping the Landscape

The increasing reliance on technology to streamline operations and gain a competitive edge remains a prominent trend in the factoring industry. Whether its staffing agencies using AI for candidate matching or manufacturers investing in automation to optimize production, businesses are recognizing the power of technology to drive efficiency and growth.

Bridgeport Capital is also seeing the impact of economic volatility on businesses of all sizes. Supply chain disruptions, rising material costs, and fluctuating interest rates are creating cash flow challenges, highlighting the need for flexible financing solutions.

“In this environment, invoice factoring has emerged as a valuable tool for businesses to access working capital quickly and efficiently, bridging the gap between paying suppliers and receiving payment from customers,” Toledo added. “Additionally, the ongoing labor shortages, particularly for skilled workers, are forcing businesses to adapt and seek innovative ways to attract and retain talent. Overall, these trends underscore the importance of financial agility and technological adaptability for businesses to thrive in today’s dynamic market.”

Opportunities and Challenges

Technology, especially AI and machine learning, is expected to continue to be a game-changer in the factoring industry. Toledo expects it to streamline everything from invoice processing to risk assessment, making things faster and more efficient. Blockchain has the potential to make transactions even more secure and transparent, building trust in the industry. Integrating factoring directly into business software could make it easier for companies to get the funding they need.

“Bridgeport Capital recognizes the immense potential to expand its reach by leveraging technology. This commitment is evident in the launch of our brand new website, www.bridgeportcapital.com, which coincided with our 25th anniversary celebration this year,” said Toledo. “The new site is designed with the latest technologies in mind to provide a seamless and user-friendly experience for our clients. Many small- and medium-sized businesses, even startups, struggle to secure traditional financing, making factoring a viable alternative. By implementing digital solutions like automated onboarding, online invoice processing, and mobile applications through our new platform, Bridgeport Capital can streamline operations and enhance the client experience. Furthermore, embracing cross-border payment platforms can unlock opportunities in the global market, while data analytics and predictive modeling can help the company better assess risk and personalize its offerings. By capitalizing on these technological advancements, Bridgeport Capital can solidify its position as a leader in the evolving landscape of working capital financing. With opportunity also comes risk. An unpredictable economy and recession could impact the demand for factoring. Bridgeport is also keeping a watchful eye on regulations and stricter lending rules, which could increase their costs and pose operational challenges.”

As new fintech companies and alternative lenders continue to enter the scene, traditional factoring companies will need to keep innovating, said Toledo. “There’s always the risk of new technologies disrupting the industry, so we need to be ready to adapt. Overall, the next few years will be a dynamic time for invoice factoring. There’s a lot of potential for growth and innovation, but we’ll need to be smart and strategic to overcome the challenges and make the most of the opportunities.”

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