Extended capital-markets CFO
Owning an asset does not mean it is available for a new financing. Existing lenders, property documents and other agreements may restrict a sale, lease or additional security. A public filing search is a starting point, not a legal clearance opinion. Qualified counsel should establish what claims apply and what consents or releases the proposed transaction requires.
Start with ownership and the right entity
Match invoices, asset registers and property documents to the proposed seller or borrower. A consolidated company name can conceal multiple legal owners. For improvements, determine the landlord and tenant rights. Do not begin with a presumed asset pool and ask counsel to make it available after a quote has been circulated.
Map claims and restrictions
Existing security can continue after an asset disposition unless relevant rules or authorization permit otherwise. UCC 9-315 illustrates this issue; state law and transaction details need counsel's review. Also inspect contractual debt restrictions and negative pledges rather than relying only on public search results.
Market reference: Uniform Commercial Code 9-315: collateral and proceeds.
Build the consent plan
Identify lender releases, landlord approvals, intercreditor arrangements, board or JV approvals and any customer assignment requirements. Specify who requests each, its expected timing and potential cost. A technically financeable asset can still be impractical if consent is uncertain or requires a broad refinancing.
Compare net benefit after clearance costs
Include debt payoffs, amendment fees, legal expense and delay in the financing comparison. Equipment financing terms can differ materially in ownership and security. If freeing the assets removes too much useful existing bank capacity, a new facility may be the wrong answer.
Market reference: ELFA: questions to ask before financing equipment.
Illustrative example, not a client result
The decision in practice
A company bought machinery with cash, but its bank holds a broad security package. The machinery is not automatically unencumbered merely because no equipment loan appears beside it. Counsel must assess the bank's claim and any release or permitted-financing provisions before a new transaction proceeds.
What to prepare
- Legal entity and asset ownership records
- Current credit agreements and relevant search results
- Property, JV and customer consent requirements
For an initial conversation, a summary is enough. Share private materials only through an agreed channel.
Common questions
Does no public filing mean no restriction?
No. Searches can be incomplete and contractual restrictions may not be resolved by a filing search.
Can we ask for a financing indication before every consent?
Yes, with clear disclosure of unresolved items. Do not present the indication as executable until the necessary conditions are addressed.
Sources and further reading
- Uniform Commercial Code 9-315: collateral and proceeds
- ELFA: questions to ask before financing equipment
Our decision framework is CFO Signals analysis. External references describe market practices and products, not an endorsement, partnership or available offer. Terms and eligibility require confirmation for your transaction.