Document background
The Bank Account Control Agreement (BACA) is a critical security document used in German financing transactions where lenders require control over a borrower's bank accounts as collateral. This agreement is commonly used in project finance, acquisition finance, and general corporate lending scenarios where cash flow control is essential for the security package. The document complies with German banking regulations and security interest requirements, establishing the mechanisms for account control while respecting German law requirements for bank account pledges and security arrangements. The BACA details how the account will be operated in normal circumstances and following a trigger event, including specific provisions for instruction rights, permitted withdrawals, and the bank's obligations. It's particularly important in the German market where direct security over bank accounts requires specific formalities and operational arrangements to be effective.
