Colocation Step-in Rights for GPU Lenders
Step-in rights let a GPU lender keep the power on and take control of the cluster when its borrower defaults on the colocation contract. They live in a three-party collateral access agreement among the lender, the borrower and the colocation provider.
The provider waives its lien on the financed GPUs, tells the lender about any default, gives the lender time to cure, and lets the lender or an operator it names run the servers or remove them.
CoreWeave's $3.1 billion DDTL V facility of May 15, 2026 asks for exactly this. The borrower must use commercially reasonable efforts to deliver a collateral access agreement within 120 days of signing any new data center lease or license, and step-in rights letters from its data center counterparties. [1]CoreWeave Financing DDTL V, LLC, Credit Agreement dated May 15, 2026 ($3.1 billion; Morgan Stanley Senior Funding, administrative agent), Form 8-K Exhibit 10.1, Sections 5.19, 5.20 and 5.22 (filed May 2026)https://www.sec.gov/Archives/edgar/data/1769628/000176962826000236/ex101.htm
Why the colo agreement threatens the lien
The colocation provider holds the building, the power and the keys. A lender's UCC-1 gives it none of those.
A standard colo contract is a license, and the provider can cut power for non-payment. Some also give the provider a security interest in all customer equipment and the right to sell it within weeks, as covered in our guide to colocation contracts for GPU clusters. That lien competes with the lender's on the same servers.
The building owner can hold a second claim that no UCC search shows, because landlord liens fall outside Article 9. [2]Uniform Commercial Code Section 9-109(d)(1): scope, excluding landlord lienshttps://www.law.cornell.edu/ucc/9/9-109 Texas gives a nonresidential building landlord a lien on tenant property in the building for rent due and rent coming due over the current 12 months. [3]Texas Property Code Section 54.021: building landlord's lienhttps://statutes.capitol.texas.gov/Docs/PR/htm/PR.54.htm
Then there is time. A GPU cluster without power earns nothing and loses value every month. The lender with a perfected lien and no access agreement waits while both happen.
Landlord waiver vs collateral access agreement
A landlord waiver only removes a competing claim. A collateral access agreement adds notice, time and access. Project finance adds a third tool, the direct agreement, which lets lenders step into a key contract when the borrower defaults on it.
| Document | What it gives the lender | What it leaves out |
|---|---|---|
| Landlord or lien waiver | The provider gives up its lien on the financed equipment | Notice, cure time, power, access |
| Collateral access agreement | Waiver, notice of default, a cure right, and a window to enter and remove the equipment | The right to keep operating under the contract |
| Direct agreement with step-in | All of the above, plus the right for the lender or a designee to take over the contract and keep running | Rarely offered by colocation providers without negotiation |
Lenders have used collateral access agreements for decades. One filed with the SEC in 2003 gives the lender 120 days to occupy the premises and remove its collateral, at a per diem rent. [4]Collateral access agreement among Beau Se Jour Company, The Old Evangeline Downs and Foothill Capital Corporation, SEC Exhibit 10.10 (2003)https://www.sec.gov/Archives/edgar/data/1235660/000119312503019307/dex1010.htm
That window starts only after any bankruptcy stay ends. [4]Collateral access agreement among Beau Se Jour Company, The Old Evangeline Downs and Foothill Capital Corporation, SEC Exhibit 10.10 (2003)https://www.sec.gov/Archives/edgar/data/1235660/000119312503019307/dex1010.htm A neocloud default often arrives with a bankruptcy filing, so a window that runs during the stay is worth little.
The clauses a GPU lender needs
Each failure point in the colocation contract needs a matching clause. The 2003 agreement already covers seven of these ten. The other three exist because a GPU cluster has to keep running to be worth anything.
| Clause | What the provider agrees to | In the 2003 agreement |
|---|---|---|
| Lien waiver | Waives its contract and statutory liens on the servers in a serial-number schedule, plus replacements | Yes |
| Personal property | Servers, network gear and liquid-cooling equipment stay personal property, not fixtures | Yes |
| Notice of default | Sends any payment default, suspension or termination notice to the lender | Within 2 days; 30 days before termination |
| Lender cure right | Lets the lender pay or fix the default without assuming the contract | Yes, during the 30-day notice period |
| Power through the cure | No suspension while the lender cures and pays current fees | No |
| Step-in and novation | The lender or a named operator takes over the contract on the same terms | No |
| Removal window | A set period after notice, or after any stay ends, to de-rack and ship | 120 days, per diem rent |
| No relocation | Does not move the financed racks without telling the lender | No |
| Estoppel | Confirms at signing that the contract is in force | Yes |
| Successors | Binds any buyer of the facility and survives rejection of the colo contract | Binds successors |
The successors clause gets tested. Cyxtera, a colocation provider, filed for Chapter 11 in June 2023. [5]Cyxtera Technologies, Form 8-K: Chapter 11 filing and up to $200 million DIP financing (June 5, 2023)https://www.sec.gov/Archives/edgar/data/1794905/000119312523160378/d497336d8k.htm Brookfield bought substantially all its assets for $775 million, closing in January 2024. [6]McCarthy Tetrault, "Brookfield Infrastructure Partners closes US$1.3B acquisition of Cyxtera Technologies through its portfolio company Evoque" (January 2024)https://www.mccarthy.ca/en/experience/brookfield-infrastructure-partners-closes-us-1-3b-acquisition-of-cyxtera-technologies-through-its-portfolio-company-evoque-data-center-solutions Every customer's counterparty changed in the middle of a bankruptcy.
What the provider asks for in return
Colocation providers sign these agreements when the lender takes away their downside. The 2003 agreement shows two of the standard answers: the lender pays per diem rent while it occupies the space and pays to repair any damage from removal. [4]Collateral access agreement among Beau Se Jour Company, The Old Evangeline Downs and Foothill Capital Corporation, SEC Exhibit 10.10 (2003)https://www.sec.gov/Archives/edgar/data/1235660/000119312503019307/dex1010.htm
| Provider concern | Usual answer |
|---|---|
| Unpaid power during the cure | The lender pays current fees from the day it elects to cure |
| Past-due fees | The provider keeps its claim against the borrower and its lien on non-financed equipment |
| Damage during removal | The lender repairs damage and carries insurance on site |
| An unknown operator in its hall | The replacement operator is named in advance and meets the provider's access and security rules |
| Space held hostage | A fixed removal window with per diem fees, then exit |
Timing matters. A provider asked before the colocation contract is signed has a new customer to win. CoreWeave's DDTL V treats the two cases differently: best efforts to get agreements from sites signed before closing, commercially reasonable efforts for new ones, both within 120 days. [1]CoreWeave Financing DDTL V, LLC, Credit Agreement dated May 15, 2026 ($3.1 billion; Morgan Stanley Senior Funding, administrative agent), Form 8-K Exhibit 10.1, Sections 5.19, 5.20 and 5.22 (filed May 2026)https://www.sec.gov/Archives/edgar/data/1769628/000176962826000236/ex101.htm Even a $3.1 billion facility accepts that some providers will not sign.
How step-in works in a default
A step-in after a payment default runs in five steps:
- The borrower misses the colo invoice.
- The provider sends the suspension notice to the borrower and the lender.
- The lender elects to cure and pays current fees.
- The replacement operator takes over remote access and remote hands, and the offtaker keeps receiving service.
- The lender re-contracts the cluster, moves it, or sells the servers.
Offtakers write the same mechanism into their own contracts. If CoreWeave becomes insolvent, OpenAI can require it to assign the master services agreement, the order form and the applicable data center agreement to a substitute operator of OpenAI's choosing within two business days. [7]CoreWeave / OpenAI, Master Services Agreement, Bare Metal Environment, Section 10(c), SEC Exhibit 10.24 (2025)https://www.sec.gov/Archives/edgar/data/1769628/000119312525052207/d899798dex1024.htm The GPUs stay in the racks and a different company runs them.
When the borrower is in bankruptcy
A bankruptcy filing pauses the access agreement along with everything else. The provider cannot lock out the debtor, and the lender cannot remove the servers while the stay holds. [8]11 U.S. Code Section 362: automatic stayhttps://www.law.cornell.edu/uscode/text/11/362
The debtor then assumes or rejects the colocation contract. [9]11 U.S. Code Section 365: executory contracts and unexpired leaseshttps://www.law.cornell.edu/uscode/text/11/365 If it rejects, the removal window starts, and the lender needs a plan for where the GPUs go next. Our guide to what happens to GPUs when a neocloud goes bankrupt covers the stay in detail.
When the provider is the one that fails
A provider bankruptcy is mostly a continuity question, because the building is worth more with the power on. Cyxtera kept operating on up to $200 million of DIP financing from its own lenders. [5]Cyxtera Technologies, Form 8-K: Chapter 11 filing and up to $200 million DIP financing (June 5, 2023)https://www.sec.gov/Archives/edgar/data/1794905/000119312523160378/d497336d8k.htm
Prepaid money is the exposure. Marathon wrote off $55.7 million of deposits and notes when its host, Compute North, filed in September 2022. [10]Marathon Digital Holdings, Form 10-K for fiscal 2022, Note 9: Compute North bankruptcy (2023)https://www.sec.gov/Archives/edgar/data/1507605/000149315223007879/form10-k.htm A cap on prepaid colocation deposits in the credit agreement limits that exposure.
References
- CoreWeave Financing DDTL V, LLC, Credit Agreement dated May 15, 2026 ($3.1 billion; Morgan Stanley Senior Funding, administrative agent), Form 8-K Exhibit 10.1, Sections 5.19, 5.20 and 5.22 (filed May 2026)
- Uniform Commercial Code Section 9-109(d)(1): scope, excluding landlord liens
- Texas Property Code Section 54.021: building landlord's lien
- Collateral access agreement among Beau Se Jour Company, The Old Evangeline Downs and Foothill Capital Corporation, SEC Exhibit 10.10 (2003)
- Cyxtera Technologies, Form 8-K: Chapter 11 filing and up to $200 million DIP financing (June 5, 2023)
- McCarthy Tetrault, "Brookfield Infrastructure Partners closes US$1.3B acquisition of Cyxtera Technologies through its portfolio company Evoque" (January 2024)
- CoreWeave / OpenAI, Master Services Agreement, Bare Metal Environment, Section 10(c), SEC Exhibit 10.24 (2025)
- 11 U.S. Code Section 362: automatic stay
- 11 U.S. Code Section 365: executory contracts and unexpired leases
- Marathon Digital Holdings, Form 10-K for fiscal 2022, Note 9: Compute North bankruptcy (2023)
Frequently Asked Questions
What are step-in rights in a GPU financing?
The right of a lender, or a backup operator it names, to take over a key contract when the borrower defaults on it, so the GPUs keep running. For a colocation contract, step-in rights sit in a three-party collateral access agreement among the lender, the borrower and the colocation provider: the provider notifies the lender of defaults, gives it time to cure, keeps the power on while it does, and lets the lender's designee operate under the contract on the same terms.
What is the difference between a landlord waiver and a collateral access agreement?
A landlord waiver only removes the landlord's or provider's competing lien on the financed equipment. A collateral access agreement includes the waiver and adds notice of default, a lender cure right, and a set window for the lender to enter and remove the collateral. A 2003 collateral access agreement filed with the SEC gave the lender 120 days to occupy and remove the collateral, starting only after any bankruptcy stay ended.
Do GPU lenders require collateral access agreements from data centers?
Large ones do. CoreWeave's $3.1 billion DDTL V credit agreement of May 15, 2026 requires the borrower to use commercially reasonable efforts to deliver a collateral access agreement within 120 days of signing each new data center lease or license, and best efforts for sites signed before closing. It is an efforts standard, because not every provider signs.
Do step-in rights work if the borrower files for bankruptcy?
Not right away. The automatic stay stops the colocation provider from locking out the debtor and the lender from removing the servers. The debtor then assumes or rejects the colocation contract, and a well-drafted access agreement starts its removal window only after the stay ends.
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