My rescue capital lender is now asking for a co-GP seat and I don't know what that actually means for my promote

The assumption doing the most work in your attorney's framing is which waterfall position the 20% attaches to. If the override comes off the top of your gross promote before anything else moves, a $310,000 projected promote becomes $248,000 before you account for fees, co-invest, or any other GP-level costs. If it attaches after your acquisition and asset management fees have reduced the net promote figure, the bite is smaller. Those are materially different numbers and the redline language is almost certainly written to favor the broader interpretation. Push for a defined dollar example in the operating agreement itself, not just the description of the mechanism, so there is no room to argue the calculation later.

The risk you have not named: your co-GP admission clause requiring majority LP approval by interest is now a live legal exposure, and the term sheet you signed may have already triggered it depending on how the PPM defines "admission." If you close the extension and amend the operating agreement without the LP vote and one of your 19 investors decides the modification harmed them, you have a problem that is bigger than the promote math. Your attorney needs to give you a written opinion on whether the term sheet signature created any binding effect on the existing LP agreement, and whether the co-GP admission clause is a condition precedent to closing. That is a securities and operating agreement question, and your answer has to come from licensed counsel who has read the full PPM, not from the fund's counsel.

On the disclosure question, yes, a new GP-level party with an economic interest almost certainly requires disclosure to your LP class. The standard is whether it is material to their investment. A promoted interest override on the back end of a deal where distributions are already $41,000 behind almost certainly clears that bar.

One thing worth clarifying before you go back to the fund: is the 20% a fixed carved interest or does it step up or down based on how close you are to the LP pref at exit? Some of these structures have a sliding override keyed to LP recovery, which would change the negotiation entirely.

What does your operating agreement say about the GP's obligation to cure the distribution shortfall before any promote calculates?

The LP consent risk is the one that can unwind the whole structure before the promote math even matters.

The $41,000 arrearage is the part I'd be staring at before the promote math, because if that fund gets a GP seat while LPs are sitting on unpaid pref, you are going to have a very uncomfortable conversation about whose interests the new co-GP actually represents.

I have never seen a "carried interest override" framed as anything other than a top-of-promote cut in practice, regardless of what the waterfall language says going in. What happens is the drafter builds the definition of "net promote proceeds" to include everything above LP pref return of capital, and suddenly your $310k is their starting line too.

Have you read the co-GP admission clause in your PPM to see whether a rescue capital provider qualifies or whether the drafters only contemplated an operating partner type of addition?