# Draft Lpa Scenario 06 > Draft a venture debt (credit) fund limited partnership agreement by adapting an equity fund precedent to the applicable term sheet and counsel notes, replacing equity-fund provisions with credit-fund-appropriate mechanics. - Skill: `finchipaiorg/draft-lpa-scenario-06` (Agent Skill) - Install (CLI): `npx skillmds@latest add finchipaiorg/draft-lpa-scenario-06` - Raw SKILL.md: https://api.skillmd.com/api/skills/finchipaiorg/draft-lpa-scenario-06/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Coding & Dev Tools - Author: FinchipAIOrg (https://skillmd.com/u/finchipaiorg) - Updated: 2026-09-22 - Page: https://skillmd.com/skills/finchipaiorg/draft-lpa-scenario-06 --- # Skill: Draft Credit / Venture Debt Fund LPA from Equity Precedent ## 1. Subject-matter triage - Treat the term sheet as controlling for economics, structure, and drafting priorities; use the equity precedent only as a drafting chassis. - Read the precedent, term sheet, and counsel notes together before drafting so that credit-fund mechanics are inserted where equity-fund mechanics no longer fit. - Confirm the registered agent and office details against the actual engagement and address before finalizing entity references. - If a term sheet point and a precedent provision conflict, the term sheet governs unless counsel notes expressly carve out a different treatment. ## 2. Failure modes the skill is correcting - Carrying over equity-fund investment mechanics without converting them to a credit fund’s lending and portfolio-management model. - Leaving distributable cash defined for exit-driven equity proceeds instead of recurring credit-fund cash flows. - Failing to distinguish performing loans from impaired or non-performing loans in the valuation regime. - Retaining equity-style control, governance, or investment restrictions that are inconsistent with debt investing. - Omitting credit-fund borrowing mechanics, leverage limits, or their effects on fee and return calculations where relevant. - Overlooking tax-sensitive issues for investors in a leveraged credit strategy. - Drafting a precedent-based LPA that looks complete but still contains stray equity-fund concepts, defined terms, or default mechanics. ## 3. Legal frameworks / domain conventions that apply - Define distributable cash to capture recurring interest, fees, prepayments, repayments of principal, exit or amendment fees, workout recoveries, and other loan-disposition proceeds that are ordinary for a credit fund. - Separate periodic income distributions from principal-return or realization distributions if the term sheet or notes contemplate different timing mechanics. - Use a valuation regime that values performing loans consistently on an amortized-cost or par-based convention, while moving impaired or non-performing assets to a fair-value framework based on recovery assumptions and an identified valuation process. - Tie the impairment trigger to objective credit events, material delinquency, restructuring status, non-accrual treatment, or another standard stated in the term sheet or notes. - Restrict investments to debt instruments and related credit positions, and address any permitted equity holdings, warrants, or control-like rights only to the extent they are incidental to credit underwriting or workout protection. - If leverage or a subscription facility is permitted, draft the borrowing authority, collateral package, use-of-proceeds, and any effect on preferred return, fee base, or capital-account mechanics exactly as the term sheet requires. - Address tax treatment for investors that may be sensitive to debt-financed income, UBTI-like concepts, withholding, or analogous adverse tax outcomes, using the representations, election, or allocation mechanics approved in the deal materials. - Use governing partnership-law, securities-law, tax, and fiduciary-duty conventions appropriate to the fund’s jurisdiction and investment strategy; do not import equity-fund drafting assumptions that depend on portfolio-company ownership or exit waterfalls. ## 4. Analytical scaffolds - Start with the approved economic and structural terms, then map each term to the closest LPA section before drafting prose. - Replace equity-fund terms systematically rather than piecemeal: investment policy, income definition, distributions, valuation, leverage, conflicts, tax, and investor eligibility. - For each equity precedent clause, ask whether the clause assumes appreciation, control, sale proceeds, or board governance; if yes, convert it to a credit-fund analogue or remove it. - Draft distributable cash broadly enough to reflect the fund’s credit income stream, but keep the mechanics consistent with the approved distribution cadence and reserve policy. - Draft valuation provisions in two layers: one for performing assets using a stable credit-oriented basis, and one for impaired assets using a fair-value process with an identified decision-maker or expert. - Build the borrowing and leverage provisions only to the extent contemplated by the source materials; do not introduce additional borrowing capacity, reserve tests, or return adjustments. - Check each defined term for equity-fund residue; replace or delete terms that presume exits, proceeds from portfolio-company equity, or control investments. - Verify that the final agreement is internally consistent across definitions, allocations, capital calls, fee provisions, distributions, and dissolution mechanics. - Where the source documents are silent, follow standard venture debt fund conventions, but keep the drafting conservative and compatible with the precedent form. ## 5. Vertical / structural / temporal relationships - The term sheet controls all deal-specific economics and structure; counsel notes control all requested edits and special carveouts; the precedent supplies only organization and style. - Distribution timing should track the fund’s income profile, which is usually more frequent than an equity realization model. - Valuation should track asset status over time: performing first, impaired or non-performing upon the relevant trigger, and then fair-valued until the asset returns to performing status or is realized. - Any leverage provisions should be coordinated with distribution mechanics, fee calculations, and preferred-return mechanics so the same borrowing does not distort multiple provisions in different ways. - If the fund’s investment authority changes after an impairment, restructuring, or workout event, the LPA should reflect that vertical transition without leaving the earlier regime operative by mistake. ## 6. Output structure conventions - Produce a single, complete limited partnership agreement draft in the required document format. - Write the agreement as operative contract text, not as commentary, a summary, or a comparison memo. - Preserve the precedent’s overall LPA architecture where useful, but ensure all equity-specific drafting has been replaced with credit-fund-appropriate language. - Use conventional fund-document sectioning, defined terms, and exhibits only as needed to implement the approved terms. - Before finishing, confirm that the deliverable file named `coppervine-credit-fund-i-lpa.docx` exists, is non-empty, and contains the operative agreement text.