Enforcing Commercial Bailee Waivers in Asset Based Lending Facilities
Executed commercial bailee waivers subordinate statutory warehouse liens, preserve borrowing base liquidity, and guarantee ninety days of liquidation site access.
Per Diem Access Rate
Meaning
A daily charge is assessed against a lender or a third party for the right to enter a facility and manage collateral after a borrower defaults. This per diem access rate covers the overhead costs of keeping the site open, including security, basic utilities, and administrative support. It is a negotiated figure that appears in the access agreements signed before the loan is funded.
Daily Charge
Accrual of the fee begins on the day the lender takes control of the inventory or equipment. This per diem access rate is usually calculated based on the square footage used or a flat daily minimum. The cost continues until the lender has removed all the assets or the site is handed back to the landlord.
Entry Right
Physical access to the goods is necessary for conducting an orderly liquidation. Without an agreed per diem access rate, the landlord might block the bank from entering the warehouse to remove the inventory. This rate ensures the landlord is compensated for the disruption and the continued use of their space during the wind-down.
Cost Accumulation
High daily fees can quickly erode the recovery value of the collateral. Lenders try to minimize the time spent on-site to keep the total expense low. If the per diem access rate is set too high, it might become more economical for the lender to abandon the lower-value assets rather than paying for the time to remove them.