Restricting LPs’ freedom of movement

Not having negotiated subscription lines themselves, investors may be unaware of terms that could block sales of their interests.

How much control do limited partners have over the terms of subscription lines, the bank loans used by general partners instead of LP capital calls to enable investments to be made more quickly? The answer is very little.

Typically, GPs are granted broad powers to enter into agreements on behalf of the GP/LP partnership – including credit agreements with third parties.