[abfunders]

Hi, another one of these $10mm escrow deals, but this one might be different than others you've seen. Really, they want $150mm, but they're willing to take $10mm tranches. The money is parked in an escrow account fully controlled by the "lender," with no liens against it and no signatory power of the "borrower," at one of the top tier US banks (BOAm Chase, WF, etc) for a minimum of 6 months, but is renewable for up to 18 months. This is going to be acting as qualified capital for another investor to make an investment. The lender can have UCCs and whatever liens they want against the "borrower." The future investor is guaranteeing the interest. They're offering 12% annual interest. It's all negotiable, that's what they're asking.

Please reach out to me via email if you have ideas. Happy to come at this from multiple angles.

[Olderguy]

Have you talked to Elon about this deal? It's probably in his wheelhouse. We have had some construction deals structured in a similar way. I was on a conference call with a surgical center acquisition in the multi millions and the lender/investor just needed 10% in the same way.

[Markt]

Yeah, this kind of deal isn’t new, but the structure here is a bit more buttoned-up than usual. If the funds are fully controlled by the lender, with no borrower access and full lien rights, that’s a plus. But calling it “escrow” might be a stretch, this looks more like a collateral/pledge to support someone else’s transaction.

The 12% return is high for essentially idle capital in a top-tier bank. If a third party is guaranteeing the interest, you’d need to vet them thoroughly, you’re depending on their ability to deliver.

Biggest question: what’s the legal structure around the guarantee, and how enforceable is it?

[brokerCompany]

On this board no one will be able to do this. Another broker pipe dream

[abfunders]

Mark: Correct, it's not an escrow. It's a collateral pledge, that's a better way of calling it, since there's 0 ability of the "borrower" to draw or lien against it in any way. I have a pitch deck, and yes, I would agree, vetting the borrower (who is an attorney himself) and the investor (a multi-billion dollar firm) is pretty straight-forward. Legal structure is a contract, and if there's UCC liens against the company's assets, then it's pretty enforceable with the various collections agencies if needed.