Letters of Credit and Other Non-Cash Collateral as a Lease Security Deposit: The Pros, Cons, Forms and Enforcement from the Perspective of Both Landlord and Tenant
This seminar will discuss the advantages of utilizing a letter of credit as a security deposit instead of cash from the perspective of both landlord and tenant. The panel will discuss the reasons letters of credit are currently preferred by landlords and the effect of the bankruptcy code on letters of credit, including the ability to draw down a letter of credit after a bankruptcy filing and limitations on damages, regardless of the form of the security deposit. The panel will also suggest a form of letter of credit and conduct a mock negotiation (between the bank’s counsel and the tenant’s counsel) of a letter of credit and will also discuss laws that govern letters of credit (ISP 98, stand-by letters of credit, and the UCP 600, commercial letters of credit), the nuts and bolts of drawing on a letter of credit and other non-cash collateral that can be used as a security deposit.
