Receivables Purchase Agreements: Current Legal and Structure Issues
As an outgrowth of traditional factoring and of the securitization of accounts receivable, the Receivables Purchase Agreement (“RPA”) market draws on both established financing techniques. The RPA market has shown itself to be adaptable to a wide variety of receivables originators and flexible in respect to documentation.
Relatively recent changes to Article 9 of the Uniform Commercial Code have increased legal support for sales of accounts. A wider variety of payment obligations – such as royalties under intellectual property licenses – can be purchased and sold in an RPA format. The legal protections against anti-assignment provisions have been strengthened under the revised Code. In addition, the increasing sophistication of electronic online platforms makes it possible to process a very large number of invoice purchases. Therefore, programs have increased significantly in size and processing efficiency.
Like securitization programs, but unlike traditional factoring, “true sale” legal opinions are generally a component of RPA facilities. While such opinions have historically been a central requirement of rating agencies, originating companies seeking to remove the sold accounts from the balance sheet, are now requesting true sale opinions as well may. The Purchasers, usually banks or other financial institutions, require true sale opinions as well as the traditional legal opinion comfort at closing.
In this [90 minute] LIVE Webcast, Mr. Peter S. Smedresman will explain the legal [fundamentals] of RPA programs and key contemporary issues in closing these transactions. We will provide the audience with an explanation of the relevant UCC provisions and how they have changed to support sales of accounts; an explanation of the relevant provisions of the U.S. Bankruptcy Code and how they interact with the UCC; the essential ingredients of a “true sale”; what is essential and what is negotiable in a Purchase Agreement; and other observations derived from negotiating and closing major transactions.
Key topics include:
- How does the Uniform Commercial Code define “accounts”? Why is this a favored collateral classification?
- What are key bank powers issues in purchasing accounts?
- Comparative status of accounts purchaser and secured creditor
- What if one or more parties or contacts are located in another jurisdiction?
- What is the treatment of purchased accounts in the seller’s insolvency?
- What are the advantages of a “true sale”?
- What are frequent negotiating issues in RPA transactions?
Satterlee Stephens LLP
Who Should Attend:
- Finance officers;
- Accountants involved in these transactions
Print and review course materials
Method Of Presentation:
NY Category of CLE Credit:
Areas of Professional Practice
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Satterlee Stephens LLP