Section 1 – Collateral/security
1.1 What types of collateral/security are available? It is customary in a project financing of a project or portfolio of projects located within the US (a US project financing) that, on the date of financial closing, secured parties receive security interests in substantially all personal and real property of the owner of the financed project or portfolio of projects and its subsidiaries (including, for instance, accounts, equipment, inventory, intellectual property, contracts, capital stock and cash), as well as security interests in all of the equity interests in such owner and subsidiaries. Note, however, that there are frequently limited exclusions from the collateral (such as, contracts and permits that are not assignable by law and assets for which security interest perfection is unduly cumbersome or expensive relative to asset value).
Section 2 – Perfection and priority
2.1 How is a security interest in each type of collateral perfected and how is its priority established? Perfection and priority of security interests in US project financings are primarily governed by, in the case of personal property, the Uniform Commercial Code (UCC) in effect in the relevant US state and, in the case of real property, the law of the jurisdiction where the real property is located.
Originally published in the IFLR REPORT | PROJECT FINANCE REPORT 2014.
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