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Would the lender for the ESOP loan require the selling shareholder to pledge the Section 1042 portfolio as collateral?

April 26, 2017ESOP Lender loan pledge portfolio require section Selling shareholder

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Would the lender for the ESOP loan require the selling shareholder to pledge the Section 1042 portfolio as collateral?

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An ESOP lender may or may not require some portion of the “tax-free” rollover portfolio as collateral for the ESOP loan. If they did require some portion of the “tax-free” rollover portfolio as collateral, they should agree to negotiate an early release.