Partial Lien Release Letter

Summary

This is a partial lien release letter template in which a collateral agent agrees to release its security interests in certain assets that have been provided as collateral for a secured loan transaction. This template includes practical guidance and drafting notes. Unlike a payoff letter that terminates all security interests in connection with the repayment and satisfaction of obligations under a credit facility, a partial lien release letter leaves a credit facility and its supporting collateral intact, while carving out specific assets that are either being sold to a third party or otherwise removed from the collateral package as agreed by the lenders. For an example of a Payoff Letter reflecting a full repayment of loans and termination of all collateral, see Payoff Letter (Financing Transaction). Note that while this template terminates the underlying security interests with respect to assets specified in the letter, further steps may need to be taken to clean up the UCC financing statements that perfect the collateral package generally. Review the UCC financing statements to determine if they must be modified to remain accurate. A financing statement that has a simple “all assets” description may not need to be updated if the specified assets are being sold to a third party, since the released collateral will no longer be an asset of the loan parties. Conform the capitalized terms to the defined terms in the relevant credit agreement. Read this partial lien release letter in conjunction with the practice note Collateral Perfection and Release in the Closing Process.