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ARTICLE · 27 AUGUST 2026

Collateral Sales Under Article 9: Lessons For Partner Loan And Investor Loan Programs

Mayer Brown
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A federal court decision clarifies critical enforcement rights under UCC Article 9 for lenders in partner and investor loan programs, addressing the 10-day notice safe harbor, commercial reasonableness standards, and timing requirements for collateral disposition notices. The ruling provides essential guidance on foreclosure procedures when limited partnership interests serve as loan collateral.

United StatesFinance and Banking
Mark Dempsey
Mark Dempsey
McKay S. Harline
McKay S. Harline
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Commercial Reasonableness, Notice Requirements, and the 10-Day Safe Harbor

Introduction

Partner loan programs and investor loan programs are core features of fund finance. A secured lender extends credit to individual participants—employees, partners, or investors—who invest in private equity or other investment funds through various fund vehicles. A borrower’s loans are secured by the borrower’s limited partnership interests (or other equity interests) in such vehicles. Foreclosure on that collateral after default is governed by Part 6 of Article 9 of the Uniform Commercial Code (UCC).

A recent federal court decision addressed a lender’s foreclosure rights in the context of pledges of limited partnership interests. The decision clarifies three issues central to partner and investor loan programs: (1) that the UCC’s 10-day notice safe harbor is not a mandatory minimum; (2) that sale price alone does not determine commercial reasonableness; and (3) that beginning a sale before a

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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