Fundamentally Connected: Otterbourg’s Long-Time Commitment To Strengthening Secured Lending

Otterbourg’s relationship with secured lending has been ongoing for decades, as the evolution of its practice and clients has been intrinsically tied to the development of the industry.

Throughout its history, Otterbourg has advocated at the international, federal and state level for secured lenders, whether they lend to small family businesses, large international companies or any size business in between, with its expertise reflecting the diverse markets that the industry serves.

From a global perspective, Otterbourg was involved with the International Institute for the Unification of Private Law (UNIDROIT), in the development of the UNIDROIT Convention on International Factoring, as adopted in
1988. Otterbourg also played a role in the efforts of the United Nations International Commission on Trade Law, as a representative for a non-governmental organization, in the development of the commission’s legislative guide on secured transactions (2007) and model law on secured transactions (2016).

At home, the New York-based law firm is actively engaged with a number of trade associations, including the Secured Finance Network (SFNet), the Turnaround Management Association, the International Factoring Association and FCI (formerly known as Factors Chain International), among others.

“Otterbourg has always been a ‘go-to’ firm with its support of these organizations and its contribution to the training and mentoring of future leaders in the industry,” David W. Morse, a partner at Otterbourg, says.

In addition to sponsoring conferences, speaking on panels and chairing committees, Otterbourg attorneys are highly engaged with these organizations when it comes to pressing concerns in commercial finance. For
example, working with the SFNet, the firm has taken a leadership role in advocating for limiting the reach of state-level commercial finance disclosure laws, by testifying before legislative committees, meeting with legislators, and authoring white papers.

Otterbourg also has been proactive in preparing lenders for the implementation of disclosure laws, co-authoring two compliances guides to interpret regulations in New York and California (with guides for Georgia
and Florida soon to follow). Additionally, the firm has aided in drafting a proposed uniform commercial disclosure law in its role as observer to the study committee of the Uniform Law Committee.

“The efforts by the state legislatures to take principles that are used in consumer finance and apply them to commercial finance of the type provided by those in the asset-based lending business are adding costs and confusion for the industry,” Morse says. “The firm has been active with the trade associations in attempting to address such matters.”

The firm serves as the chair of the Legal Committee for FCI, the representative body for the factoring and financing of domestic and international trade receivables. Otterbourg also has deep ties with the New
York Institute of Credit, which offers programs related to factoring, secured lending and restructuring, among other things. Otterbourg partner, Melanie Cyganowski, a former U.S. chief bankruptcy judge, who serves as president of the organization, previously launched the Women’s Division as a way to advocate for women in the profession.

During the COVID-19 pandemic, Otterbourg further displayed its dedication to the secured lending industry, authoring articles and conducting webinars to help lenders better understand the Paycheck Protection Program and Main Street Lending Program and worked with the U.S. Small Business Administration to draft a form of subordination agreement that allows loans made under the SBA’s Economic Injury Disaster Loan program to be subordinated to secured lending facilities. •