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What is the legal structure of a borrower payment dependent notes (BPDN) offering?

Luke V

Yieldstreet's BPDN structure does not have the same member limitations as an SPV structured investment offering. Deals structured using BPDN will permit Yieldstreet to have more than 99 participating investors per offering.

For each BPDN offering, a new SPV will be formed as a wholly-owned subsidiary of the BPDN Issuer (i.e., the Issuer will create Series 1 SPV). That SPV exists to fund, acquire and originate a loan with a borrower, or enter into a participation agreement directly with the originator of a loan.

The BPDN Issuer will then issue a borrower payment dependent note associated with that specific SPV (i.e., Debt Note 1) and corresponding asset directly to investors (the debt note holders). Once the investment is fully allocated and funded on Yieldstreet's platform, the BPDN Issuer will pledge 100% of its equity in the SPV to the trustee under the Indenture for the benefit of the associated debt noteholders.

The trustee is the Delaware Trust Company, which acts as the secured party with respect to the pledge of the equity interest in the associated SPV for the benefit of the BPDN noteholders.

Last updated: 8 months ago

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