Independent Managers (Directors for corporations) or Special/Springing Members for special/single purpose entity (“SPE”) are often required by institutional lenders and rating agencies for the financing of assets. The use of a SPE permits lender’s pricing to be determined by the asset(s) and the related cash flows of the SPE, thereby reducing the borrower’s cost. The lender also derives a benefit: the ability to sell the loan into the secondary market.
The Independent Managers provide protection for the lenders with an assurance of “independence” on material corporate actions. No bankruptcy action, for example, can be declared without the approval of the Independent Manager, who, by definition, is not related to or controlled by the borrower. The Operating Agreements of these SPEs can specifically provide that the Independent Manager is to only consider the Company’s and its creditors’ interests in making decisions.
SMC provides professionals available to serve as Independent Directors/Managers/Members for bankruptcy remote SPEs. Our cost conscious fees are determined by the specific duties of the individual(s), the number of SPEs, and appropriate indemnification for the individual(s) appointed. The experience of our directors is reflected in our Team Profile.
To determine our duties, all we need to review is the SPE’s operating agreement or bylaws and articles of incorporation. The only signed document we require from a client is our Indemnity and Fee Agreement.
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