esop guy Pledging company assets as collateral

I've been spinning my wheels on this one, so I am reaching out to my colleagues for guidance.

Bank wishes to lend Company funds secured by Company's equipment, accounts receivable, inventory, etc.

Company is owned 85% by the Company's retirement plan ("Plan") and 15% equally by two individuals: Owner A and Owner B

Three individuals used their balances in the Plan as an equity infusion into Company. One of these individuals is Company's President and Secretary/Treasurer and a Board member; and another is Company's retirement plan trustee (for the 85% Plan shareholder)

While the rollover assets of the Plan can't be pledged as collateral, nor can the Plan guarantee the Bank loan; can any other assets owned by Company be used to secure the loan from the bank, or does it result in a prohibited transaction.  If so, where in the Code, Regs, case law would I find that.  I have searched everywhere.

I think you're looking for 29 CFR 2510.3-101, which defines "plan assets." There's a lot in that rule, but generally the corporate assets of an "operating company" are not considered plan assets so can be pledged for a bank loan to the company without causing a PT. 

Thank you so much for this!

But even if that pledge is not a prohibited transaction, whether a retirement plan should allow the corporation to do the dealings described involves a distinct set of fiduciary-responsibility questions.

Each fiduciary of the retirement plan should lawyer-up. And each of them might prefer a lawyer free from others’ interests.