7A asset purchase - do all assets get locked by UCC1 or can vendor retain?

by a searcher from The University of Auckland - The University of Auckland Business School

3 years ago

Asset purchase via SBA 7A - newly incorporated C-Corp holding company acquires assets from seller corp..  

Can some assets be excluded from sale and retained by seller?

Assets are heavy equipment/machinery.

Thanks.

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3 comments

lender from California State University, Sacramento - College of Business Administration

Depending on certain nuances to the deal, we have seen where certain assets can be potentially excluded from the purchase agreement and financed via other mechanisms. Potentially certain assets could be excluded from the transaction structure if done in a way that doesn't jeopardize business operations, debt coverage, buyer's ability to operate, or lender's control. In all cases, the assets being acquired via the SBA loan proceeds must be secured by a UCC 1 lien filing. In this case of a potential Seller sale/leaseback on the equipment, there are sba nuances and the agreements must be reviewed carefully to make sure there aren't business operation control issues. And we'd definitely want to know the reasons why this is being requested as it is outside the norm.

3 years ago | like reply | 3 likes

lender from Sam Houston State University - College of Business Administration

We would typically release AR and inventory if it was needed for a LOC, but not the main assets being purchased like the equipment.

3 years ago | like reply | 2 likes

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