Proposed Tax Regulations May Allow Foreign Assets to Serve as Credit Support

6 November 2018
View Debevoise Update
Key takeaways:
  • The IRS issued proposed regulations that may allow a US parent corporation to include foreign assets in its collateral package without adverse US tax consequences.
  • Lenders may require a US parent corporation to offer foreign subsidiaries’ assets as credit support or pledge 100% of the stock of its foreign subsidiaries.
  • Borrowers must weigh potential lower borrowing costs against change-in-law risk and non-US impediments to providing non-US collateral.