Closing Your Deal on Time: A Strategic Checklist for Independent Director Appointments

You’re nearing the closing of your real estate financing, and the loan agreement calls for a bankruptcy-remote SPE with an independent director. This requirement can often feel like a late-stage hurdle but handling it with precision is the difference between seamless funding and a frustrating, or even costly delay. At this stage of the transaction, execution risk is the primary enemy of a smooth closing.

Below is a high-level checklist designed for borrowers and legal counsel to ensure the independent director appointment is managed with professional rigor.

The Strategic Pre-Closing Checklist

1. Understand the specific "Material Action" requirements required to be transferred to the independent director. Does the lender require one or two directors? Is there a list of pre-approved providers, or is it a "nationally recognized provider" clause? The language will usually have very specific requirements regarding the director’s role in approving a voluntary bankruptcy filing or a change in the entity's business purpose.

2. Engage a provider when you notice it as a requirement in the checklist or loan agreement. Engaging a firm like SPE Specialists early allows for conflict checks and onboarding to be completed long before the closing date. In the world of CRE, where "time is of the essence," early engagement is a hedge against administrative bottlenecks.

3. Synchronize Transaction Documents. Your independent director provider needs to review the operating agreement and relevant loan documents to ensure their services conform. This allows them to verify that the governance language aligns with market standards. A specialized provider will ensure the "separateness covenants" are properly reflected to protect the bankruptcy-remote status of the SPE.

4. Streamline the Conflicts Check The service provider must ensure the proposed director is fully independent of all parties. To expedite this, provide the entities across both debt and equity to ensure there has not been a material relationship in the last five years.

5. Execute Service Documents and operating agreement. Usually the independent director will have a 2-8 page service agreement. In addition, the provider also will sign the operating agreement that adds their responsibility of the independent director, and depending on the lender requirements, a lender certificate from the independent director, which effectively recognizes each other. Choosing a provider that supports both electronic and "wet" signatures ensures that geographic barriers don't slow down the process.

   
   

Why SPE Specialists is the Industry Standard for Speed

At SPE Specialists, we don't just provide a signature; we provide a structural safeguard. Our team is composed of seasoned real estate professionals who understand the nuances of capital markets, structuring, and debt lending.

• 24-Hour Closings : We are built for the velocity of commercial real estate. We can finalize deals in 24 hours with wet signatures or even the same day with electronic signatures.

• Sophisticated Fiduciary Oversight: We understand the delicate balance between protecting the lender’s interest in bankruptcy remoteness and the borrower’s operational needs. Our background in managing multi-billion dollar portfolios means we speak the language of your credit committee.

Direct Legal Collaboration: We work as a seamless extension of your legal team. We review documents with a focus on compliance and structural integrity, ensuring your deal closes on time, every time.