Although the growing market for subscription-backed credit facilities has witnessed very few defaults or similar events necessitating non-consensual enforcement actions, Subscription Facility lenders and other secured parties thereunder nevertheless should understand and, if necessary be prepared to quickly enforce their rights in the collateral pledged under such Subscription Facility—a point consistently reinforced by both bank regulators and risk teams at many of our clients. Similarly, private equity fund borrowers and fund sponsors should also understand the remedial actions a Secured Party may take under a Subscription Facility so that they can be prepared to respond appropriately should a Default arise and the Secured Parties elect to exercise their enforcement rights.
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