Visa Backlogs
and Redeployment of
EB-5 Investor Funds –
Securities Law Considerations
by Mariza McKee and Robert Ahrenholz
Visa backlogs result from more people applying for a
visa in a particular category or country than there are visas
available.1 The drawn-out timeframe for completion of the
EB-5 immigration process, from Form I-526 filing to Form
I-829 adjudication, continues to create new problems for
regional centers and project sponsors as the queue of EB-5
investors born in Mainland China grows longer. These EB-5
investors are estimated to face at least a six-year wait before a
visa number is made available to them for immigration to the
United States. Based on some common EB-5 deal structures
(e.g. five-year loan transactions), EB-5 investments deployed
by new commercial enterprises to job creating entities may be
repaid to the new commercial enterprise (a “Repayment”), and
available for ultimate repayment to EB-5 investors, during the
visa number assignment waiting period.
Repayment is problematic. To remove conditions on an
EB-5 investor’s conditional residence status, as set forth in
8 U.S.C. § 1186b(d)(1) and 8 C.F.R. § 216.6(a)(4), EB-5
investments must be “at risk” and “sustained throughout”
the period of the EB-5 investor’s conditional permanent
residence in the United States (including during Form I-829
adjudication). Many new commercial enterprises have
provided for redeployment of Repayments (a “Redeployment”)
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received prior to removal of conditions to get ahead of this
issue. The solution to these issues from an EB-5 regulatory
compliance standpoint, however, is not as simple as adding
a Redeployment right to the operative offering documents.
Redeployments implicate several securities law considerations.
This article addresses some of the more common securities
law issues that should be considered in connection with
structuring Redeployments in EB-5 transactions.
Sustained, “At Risk” Investment During Form
I-526 and Form I-829 Adjudication
To reiterate, if EB-5 funds are repaid to a new commercial
enterprise and adjudications of both the applicable Form I-526
and Form I-829 investor petitions have not yet occurred, the
corresponding EB-5 investments to meet the “at risk” and
“sustained investment” requirements if the invested funds
remain in the new commercial enterprise as cash (whether held
in the new commercial enterprise’s bank account or an escrow
account) or even if they are invested by the new commercial
enterprise in other investments that are ultimately determined
not to be “at risk.” The USCIS May 30, 2013 Policy
Memorandum, stated that for EB-5 capital to be considered
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