Debt Fund Structuring: Disclosure, Reg D, and Borrower Risk
from Syndication Attorney Field Notes with Tilden Moschetti Hosted by Tilden Moschetti
When setting up a private debt fund, it is easy to focus entirely on the lending side of the business and forget that raising the capital is a securities offering. In this field note, Tilden Moschetti unpacks the real-world mechanics of structuring a debt fund under Regulation D. We explore the core tension sponsors face when managing borrower default risk versus investor expectations, and why a Private Placement Memorandum (PPM) acts as a crucial firewall. Topics include the risks of the 'guaranteed yield' trap, the practical setup of fund and manager entities, and why distribution mechanics must clearly track what the fund actually collects. Also see: How to Structure a Debt Fund: Legal, Financial, and Compliance Essentials — https://www.moschettilaw.com/how-to-structure-a-debt-fund-legal-financial-and-compliance-essentials/ Note: This episode's audio is generated using AI voice cloning technology based on Tilden Moschetti's written work. Watch the video on YouTube: https://youtu.be/G22QapjOpgM
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What this episode covers
Sponsors often think of debt funds purely as a lending business, but raising capital for those loans is a securities offering. In this field note, we explore why a Private Placement Memorandum is essential for managing borrower default risk and how to align distribution mechanics with actual fund performance.
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