How the money is held, moved and taken back.
This note sets out the security package instrument by instrument, the reasoning behind the operating layer, the mechanics of a funding and collection cycle, and what happens on enforcement. It is written for the people who will be asked to sign off, rather than for the people who will be asked to allocate.
Instrument by instrument.
Nothing here is exotic. The only design decision that departs from a conventional receivables warehouse is where the operating layer sits, and that decision is documented rather than assumed.
Account pledge: Security over the SPV’s bank accounts. Debenture: Fixed and floating over the obligor. Share pledge: The entity, not only its assets.
Deed of charge: Over the SPV’s own accounts. Acknowledgment letter: How the institution acts on notice. Servicer power of attorney: Granted on servicer transition.
Receivables purchase: True sale into the borrower SPV. Debtor confirmation: The report is the conclusive record. Credit insurance: Used where it adds protection.
| Instrument | Secures | Effect |
|---|---|---|
| Account pledge | Tier 1 | Security over the SPV’s accounts at an account bank the lenders approve: the funding account that receives each drawing, the transaction account from which the agent applies the waterfall, and the reserve accounts. |
| Debenture | Obligor | Fixed and floating security over the obligor’s assets and undertaking, including receivables, contractual rights and the platform records that evidence them. |
| Share pledge | Obligor | Security over the shares in the borrower SPV, so the entity itself can be taken rather than only its assets. |
| Deed of charge | Tier 2 | The debenture’s charge over the SPV’s own accounts in the operating layer, with notice to the institution and its acknowledgment. Each seller’s collection account is designed as a restricted account: it can pay only the SPV or a verified bank account in the seller’s own name. |
| Acknowledgment letter | Tier 2 | Written acknowledgment from the electronic money institution itself of notice of the charge, setting out how it will act on a revocation notice. |
| Receivables purchase agreement | Assets | True sale of eligible receivables to the borrower SPV, with notice to the debtor where applicable, so the asset is isolated before it is funded. |
| Servicing agreement | Operations | Defines servicer duties, standard of care, reporting obligations, termination triggers and the replacement servicer mechanic. |
| Servicer power of attorney | Transition | Granted to the standby or replacement servicer on a servicer transition, with authority to service and collect the receivables and give instructions on the operating accounts without further consent. |
| Debtor pre-signed confirmation | Assets | The commercial anchor: the debtor’s own switch report is the conclusive record of the traffic it accepted, and the debtor agrees to pay only into the account designated for its supplier. Obtained before onboarding, not chased after default. |
| Credit insurance | Assets | Cover against non-payment where it adds protection, for example to support a debtor below the net worth threshold, sitting behind the structural protections rather than in place of them. |
Why an electronic money institution, and why a deed of charge.
This is the question every counsel asks first, so it is answered first.
Why the operating layer is not a bank account
A pledged bank account is an excellent way to secure capital at rest and a poor way to control capital in motion. Daily funding against verified delivery requires per-party segregated accounts, a distinct payment reference per debtor, programmatic distribution against platform events, and an audit trail written at the moment of transfer rather than reconstructed at month end. Correspondent banking does not provide those things at the speed or granularity the asset requires.
A regulated electronic money institution does. Client funds are held in segregated accounts, each party in the flow holds its account in its own name, each debtor pays a unique virtual account in its supplier’s name, and every movement is executed by authorised API call and tagged by type. Neither Lenderwize USA Inc. nor Lenderwize Limited holds an account on the payment platform. That is what makes segregation a structural property rather than a policy.
Why a deed of charge rather than an account control agreement
An electronic money institution is not a deposit-taking bank. Account control agreement drafting assumes a bank that can be instructed to block, freeze and remit under a tripartite arrangement, and it does not attach cleanly to an institution operating on a different regulatory footing. Insisting on the familiar instrument produces a document that reads well in a conditions precedent checklist and fails at the moment it is needed.
The equivalent that works for an electronic money institution is a deed of charge over the SPV’s accounts, an acknowledgment letter in which the institution acknowledges notice of the charge and sets out how it will act on a revocation notice, and a servicer power of attorney granted on a servicer transition. Together these are designed to give the security agent and a replacement servicer control of the accounts on enforcement. The senior facility documentation, negotiated between counsel on both sides, reflects this approach.
We will say this rather than have you discover it: a pledge over a bank account can be the stronger instrument in some enforcement scenarios, and if a lender prefers a bank at the operating layer, the architecture accommodates it with equivalent controls. What does not work is bank drafting applied to a non-bank counterparty.
One turn of the money, start to finish.
Steps 03 and 11, highlighted, are the control points; the platform runs the purchase, collection and allocation steps automatically against contracted logic.
- 01
Commitment available
Undrawn commitment stays with the lender. Each drawing is made against the borrowing base, with a compliance certificate, into a pledged SPV bank account.
- 02
Borrowing base calculated
The platform calculates the base continuously from eligible receivables; each quarter a forecast sets out projected origination, funding needs and the intended drawdown schedule.
- 03
Release within the agent’s caps
The control point. Capital moves to the operating layer only within quarterly caps the agent accepts or sets, and no new purchases are funded while a default or drawstop continues.
- 04
Delivery verified
Each business day the debtor emails us a traffic report generated by its own switch, under its signed confirmation letter. Volume and value come from the debtor’s own systems, before eligibility is tested.
- 05
Receivable purchased and advance released
Eligible receivables are purchased automatically within criteria. The advance is paid into the seller’s own collection account, with part of the price held back as the seller deposit. The platform fee paid by the seller is calculated at funding; the programme documents set when it is paid. The servicing fee is paid by the agent through the priority of payments. Each transfer is tagged and auditable.
- 06
Idle capital is swept
A drawing not deployed within a short window, and any balance in the SPV’s disbursement account above the agent’s cap, move to the SPV’s pledged transaction account. Cash waiting to fund purchases is limited to the quarterly caps.
- 07
Invoice matched to the debtor’s reports
At period end the seller’s invoice is matched against the debtor’s own reports for the period. The invoice records the obligation; it does not create it.
- 08
Debtor settles to its own virtual account
Each debtor pays a unique virtual account in its supplier’s name, and receipts are swept to the SPV collection account within one business day. Payment routing is contractual and designated under the confirmation; only Lenderwize, as servicer, can change it, not the seller.
- 09
Asset closed, receipt split
On repayment the platform splits the receipt in a fixed order: principal and interest stay with the SPV, for recycling or for the agent’s waterfall, and the seller’s retained balance is returned once the asset closes. The logic is hard-coded to facility terms under change control.
- 10
Partial payments allocated, not closed
Where a debtor pays part of an obligation, the amount is allocated against the asset without closing it. The residual remains outstanding and visible, and seller reimbursement is deferred until the asset closes.
- 11
Distribution approved by the agent
The control point. Collections that are not recycled move to the SPV’s pledged transaction account by the next day, and on each interest date the agent applies the priority of payments against a distribution certificate it must approve.
- 12
Collections recycle
Collections recycle into new eligible receivables through the same eligibility gate, but only during the availability period and while no default or drawstop continues, the covenants are met, the disbursement account cap holds and the transaction account already covers what is due on the next interest date.
What happens if we are the problem.
A servicer that cannot be replaced is a single point of failure dressed as a relationship. Three questions decide whether this programme survives its servicer, and each has an answer in the documents.
Yes: designed to work without our cooperation
The deed of charge and the acknowledgment letter are designed to let the security agent direct the SPV’s accounts on a revocation notice, without our cooperation, and on a servicer transition the servicing agreement provides for a power of attorney to the standby or replacement servicer. The acknowledgment sets out in advance how the institution acts on that notice, so the answer does not depend on a negotiation conducted during a default.
Yes, on defined triggers
The servicing agreement sets out termination triggers and the replacement servicer mechanic. The obligations that matter operationally are the reporting feed, the debtor confirmations and the collection routing; all three are documented artefacts that the servicing agreement requires us to hand to a standby or replacement servicer, not institutional memory.
This is the honest constraint
Esoteric collateral is harder to hand over than mainstream receivables; a replacement servicer must be able to read traffic reports and operate the payment layer. We treat this as a real diligence item rather than a formality, and the continuity documentation, data escrow position and candidate arrangements are open for review in the data room.
Graduated response, not a cliff edge
The senior facility documentation provides for drawstops that stop new purchases while the existing book continues to collect: key person changes, portfolio performance triggers, covenant and undertaking breaches and servicer events among them. If a drawstop continues for five business days, the borrower’s rights to operate the SPV’s bank accounts are suspended and the security agent can apply the balances. An event of default goes further: while it continues, the servicer acts only on the security agent’s instructions, and the agent can have the servicer replaced.
Tested, not assumed
A business continuity plan covers the platform, the payment rails and the data layer, with a simulation test report available for review. Core infrastructure vendors hold SOC 2 Type II attestation; vulnerability scanning and penetration testing run continuously through a CREST-accredited provider.
Independence where the money is distributed.
In a traditional structure the account bank supplies independence by standing between the servicer and the money. Here the operating layer runs on an electronic money institution, so independence is placed at the point of distribution: collections that are not recycled move to the SPV’s pledged transaction account at the account bank, and the agent applies the waterfall from there. Three controls sit with the agent and security agent, alongside the controls the lenders hold directly or through the agent.
- C1
Agent-applied waterfall
On each interest date the agent applies the priority of payments from the SPV’s pledged transaction account. The platform computes the figures from facility terms; the agent applies them.
- C2
Distribution certificate
At least two business days before each interest date the borrower delivers a certificate of the proposed distribution, signed by two key persons, in a form and substance satisfactory to the agent.
- C3
Account control
Under the senior facility documentation the agent has signing rights over the transaction account at all times and applies the waterfall from it, and the security agent alone signs on the reserve account. The SPV, the servicer and the delegated servicer also have signing rights over the transaction, funding and purchase reserve accounts; payments out of them may be made only as the senior facility documentation provides, and any other withdrawal needs the security agent’s consent.
- L1
Quarterly deployment caps
The maximum balance of the SPV’s disbursement account in the operating layer, and of undeployed drawings in its funding account, proposed each quarter and accepted or set by the agent. Each drawing also carries a compliance certificate tested against the borrowing base.
- L2
Live API and dashboard visibility
Across every account on the payment platform and every transaction through it, in real time, with each transfer tagged by type at the moment it occurs.
- L3
Read-only account access
Reconciliation without asking the servicer for a file.
- L4
Scoped servicer access
The structure is designed so that the agent holds the account-holder credentials for the SPV’s accounts with the payment institution, and our key is scoped to the transactions the facility authorises, with no payout capability on those accounts. Every action is logged.
- L5
Quarterly borrowing base audit
At the agent’s call each quarter, by an independent auditor of international repute, tested against the eligibility criteria.
The ones that come up every time.
01If the servicer operates the platform that calculates the waterfall, who stops it changing the waterfall?
The priority of payments is hard-coded to facility terms under change control, and the agent, not the servicer, applies it from the transaction account, against a distribution certificate it must approve. Every allocation is tagged by type at the moment of transfer and is visible to the lender in real time through the API and dashboard, and the agent can commission an independent borrowing base audit every quarter. The design does not rest on the servicer’s word alone.
02Why should we be comfortable with capital leaving the secured account at all?
Because the crossing is limited at every point: each drawing is tested against the borrowing base, the SPV’s disbursement account in the operating layer is capped at levels the agent accepts or sets each quarter, drawings not deployed within a short window move to the pledged transaction account, the SPV’s own operating accounts sit inside the security package, and no new purchases are funded while a default or drawstop continues. The alternative, holding everything in a bank account, would mean funding on a cycle the asset does not have.
03What stops the seller redirecting a debtor payment?
Payment routing is designated in the debtor’s pre-signed confirmation before any funding occurs. Only Lenderwize, as servicer, can change the designated account; the debtor must disregard payment instructions from anyone else, the seller included, and a payment made to any other account does not discharge the debtor. Each debtor settles to a unique virtual account in its supplier’s name rather than to a shared account, and receipts are swept to the SPV collection account within one business day. A change the seller tried to make would require the debtor to act against a confirmation it has already signed, and a payment that did not arrive where expected would show on the platform when it fell due.
04How is dilution handled?
Structurally rather than by reserve. The debtor’s confirmation makes its own switch report the conclusive record of the traffic it accepted, which narrows volume disputes at the contract, and eligibility excludes any receivable carrying a dispute, offset claim or fraud indicator at the purchase date. A minimum seller deposit sits beneath the advance on every transaction. Residual dilution experience is in the performance data in the data room, and we would expect you to test it there rather than take the design on trust.
05The programme is concentrated in wholesale telecommunications. How is that managed?
Openly. Concentration limits apply by debtor, seller and country. Under the senior facility documentation only telecoms carrier receivables are eligible; adjacent metered services would be added by agreement, one sector at a time, each gated on performance. Telecommunications is where the verification model is strongest, which is why the programme starts there.
06Artificially inflated traffic is a known problem in this market. What is your exposure?
Real, and treated as the primary loss vector rather than an edge case. Fraud is covenanted, not priced: a receivable identified as fraudulent comes straight out of eligibility and the borrowing base, verification runs to the debtor’s own reporting rather than the seller’s, and the debtor confirmation means a carrier that disputes traffic is disputing its own systems’ output. Our fraud controls and incident history are open for review under non-disclosure agreement.
07Does credit insurance carry the structure?
No, and that is deliberate. Cover against non-payment is used where it adds protection, but it sits behind the debtor confirmation, the security package, the concentration limits and the seller deposit rather than in place of them. A structure whose only real protection is an insurer’s continued appetite has a single point of failure, and that failure mode is well documented in this asset class.
08What does a replacement lender actually inherit?
A bankruptcy-remote borrower with a documented security package, a receivable pool with a live tape and full stratifications, a signed confirmation letter from every debtor in the pool, with payment routing designated under it, and an operating layer that a standby or replacement servicer takes over under the servicing agreement, with a power of attorney granted on the transition. The programme is designed to be handed over, not just to be operated.
Ask it directly. We would rather answer a hard structural question in week one than have it surface in week five of a credit process. Request data room access below and put the question in the note field; it goes to the person who negotiated the clause, not to a mailbox.