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ARTICLE · 27 JUNE 2024

NAV Facilities Appraisal And Valuation Challenge Rights

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Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower's portfolio of investments, where the amount available for borrowing is based on the value...

United StatesFinance and Banking
Kiel Bowen
Kiel Bowen
Ann Richardson Knox
Ann Richardson Knox
E. Perry Hicks
E. Perry Hicks
John Paul G. Igoe
John Paul G. Igoe
Alexander F. Kingsley
Alexander F. Kingsley
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EXECUTIVE SUMMARY

Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower's portfolio of investments, where the amount available for borrowing is based on the value of such underlying portfolio investments. The borrowing base may be calculated based on the net value of the borrower—its total assets minus total liabilities—or it may comprise a selected subset of eligible assets. The determination of the borrowing base depends on the borrower's reported value of its investments, which may originate from the sponsor or borrower's reporting, a third-party appraiser, the third-party sponsor issuing the investment, or a purchase or market value (in the case of publicly available marks). Because the reported value may come from the borrower and not an impartial source, lenders may require a periodic third-party valuation or the right to challenge the borrower's valuation by obtaining a third-party appraisal of some or all relevant

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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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