Asset-Based Lending is a category of debt financing in which emphasis is placed on the assets of the borrower rather than its credit-worthiness. The lender's credit analysis focuses on the ability of the lender to fully recover its loans upon the enforcement of its security by way of a sale of the assets. By contrast, conventional financing places emphasis on the ability of the borrower to repay its loans from its cash flow. Accordingly, asset-based lenders may lend in the face of losses where conventional lenders will not. As a result of this emphasis, asset-based lenders always require first priority security over the assets comprising the collateral for the loans. It is also typical for the lender to conduct extensive due diligence with respect to the borrower's assets to assess and reduce any risks that could limit recovery upon enforcement.
The ABL practice area generally includes the representation of domestic and foreign banks and financial institutions, as lenders, and corporations and other entities, as borrowers. ABL transactions can take on a variety of forms including single lender loans, syndicated facilities, cross-border loan transactions, as well as debtor-in-possession financing and can be based upon operating assets, fixed assets or a combination of both. Work in this area includes the provision of transaction structuring advice, drafting and negotiating transaction documents, due diligence, taking and perfecting security, and providing legal opinions in connection with the loan transactions.
Please note that the Lexpert Canadian Directory has a separate section for BANKING & FINANCIAL INSTITUTIONS.