Publications
- Lending, Investing and Trading After the Market Break
Recent dramatic downturns in the credit, equity and derivatives markets, together with an acute general shortage of liquidity, will present attractive new opportunities for lenders, investors and traders with cash to deploy. At the same time, market participants will need...
October 2008
- SEC Extends and Modifies Short-Sale Disclosure Regime
On October 15, 2008, the Securities and Exchange Commission issued Release No. 34-58785, extending and adopting modifications to the Form SH short-sale reporting regime that had been in place on an emergency basis since mid-September. The attached memorandum describes the...
October 2008
- The Defaulting Lender in Today's Loan Market
Volatile markets often highlight underlying risk factors and force market participants to re-examine cherished assumptions. The business of lending has historically focused on a borrower’s credit risk. Today, in a credit market turned upside down, borrowers must analyze lender credit...
October 2008
- New Legislation Limits Deferral of Compensation from Offshore Entities
The recently enacted Tax Extenders and AMT Relief Act of 2008, part of the bill signed into law by President Bush on October 3, 2008, contains a provision which eliminates the ability to defer compensation payable by certain offshore entities,...
October 2008
- Trading Swap Termination Claims
Sellers and buyers of swap termination claims take on unique economic and legal risk that can be managed through appropriate legal documentation. This memorandum describes the basics and trading of swap termination claims. Download Memorandum...
October 2008
- LMA Sub-Participation Agreements and Grantor Insolvency
This memorandum, of interest to participants in the European and Asian secondary bank loan markets, provides a timely overview of the issues facing a sub-participant under a Loan Market Association ("LMA") English-law governed sub-participation agreement when the creditworthiness of the...
September 2008
- Memorandum: Tax Characterization of Series Limited Liability Companies
The Internal Revenue Service has issued a Private Letter Ruling in which the Service determined that each series in a multiple series limited liability company should be considered a separate entity for United States income tax purposes. This has implications...
August 2008
- Memorandum: Enforcement of Creditors' Rights Under the UCC: Is Shareholder Consent Required?
Boards of directors of troubled companies must balance their fiduciary obligations to shareholders and creditors. What does the board do when a secured creditor offers to accept all or substantially all of the corporation's assets, in full or partial satisfaction...
June 2008
- Memorandum: Equity and Debt Decoupling: Derivative Instruments Challenge Fundamental Assumptions of Corporate and Bankruptcy Law
The rapid growth in derivatives as hedging instruments, particularly through equity swaps, credit default swaps and loan credit default swaps, has challenged fundamental assumptions underlying corporate, federal shareholder disclosure and bankruptcy law. In the attached memorandum, our colleagues Jon Kibbe,...
June 2008
- Memorandum: Delaware Chancery Court Creates Potential Pitfall For Indemnification And Advancement Rights
Anyone who has been involved in civil litigation or a regulatory investigation can appreciate the speed with which legal bills can add up or the costs of settlement. Directors and officers frequently are targets of civil litigants and regulators, which...
June 2008
- Memorandum: The SEC Invokes Its Enforcement Authority Over What It Asserts Are Security-Based Swap Agreements
The market for interest rate swaps – a derivative product in which one party pays to the other party interest based on a fixed rate in exchange for payment of interest based on a floating rate – now exceeds $309...
May 2008
- Memorandum: Navigating Anti-Bribery Restrictions to Win Business in the Global Marketplace
Anti-corruption and anti-bribery initiatives are the current focus of regulators around the globe. Aggressive enforcement of the United States Foreign Corrupt Practices Act ("US-FCPA") by U.S. regulators, including enforcement actions against companies based outside of the United States for conduct...
May 2008
- Memorandum: LevX Publication
After the July 2007 launch of the standard terms of credit default swaps on leveraged loans for the European market, the market anxiously awaited the launch of an ISDA-approved index product. March 17, 2008 – the date the Markit iTraxx...
May 2008
- Memorandum: PCAOB Undertakes To Ensure That Auditor Independence Evaluations Are Better Informed
The Public Company Accounting Oversight Board last week adopted Rule 3526 regarding Communication with Audit Committees Regarding Independence. The Board’s action concluded a rulemaking focused on assuring that public company audit committees have before them, at the time they consider...
May 2008
- Memorandum: Seventh Circuit Court Slams Bankruptcy Trustee for Asserting Frivolous Claims
Bankruptcy trustees have been both aggressive and the beneficiaries of substantial deference by courts in recent years. In this short memorandum, our partners Brian S. Fraser and H. Rowan Gaither describe a recent decision from the Seventh Circuit Court of...
April 2008
- Publication: Managed Funds Association Reporter - "Navigating the Regulation of Hedge Fund Marketing"
Our partners, Lucinda O. McConathy and Patrica C. O'Prey, are published in the March/April 2008 issue of Managed Funds Association Reporter for their contributions to "Navigating the Regulation of Hedge Fund Marketing". Marketing a hedge fund involves a myriad of...
April 2008
- Memorandum: Compliance Strategies for Investment Businesses and Global Corporations - International Anti-Corruption Regulation
In response to more stringent anti-corruption standards, increased enforcement and greater cooperation among regulators in the international community, investment businesses and global corporations are finding themselves in the position of having to change the manner in which they operate. This...
April 2008
- Memorandum: Effectiveness of Power of Attorney Provision in Claim Purchase Agreements in Bankruptcy - Delphi Bankruptcy Case Raises Issue
A recent ruling in the Delphi Corporation bankruptcy case calls into question the effectiveness of power of attorney provisions found in many claim purchase agreements. At hearings held on February 21, 2008 and February 26, 2008, the Honorable Judge Drain...
April 2008
- Memorandum: The Second Risk that Keeps Loan Participants Up at Night
Owners of bank loan participations take on two kinds of credit risk: (i) the borrower's failure to pay the underlying bank loan, and (ii) the loan participation grantor's bankruptcy. The first risk is well understood and carefully analyzed in each...
March 2008
- Publication: The Distressed Debt Report - "Bailing Out - Solutia, Genesco Cases Watched for Guidance on MAC Clauses"
In the article attached below, our partner Patricia O'Prey discusses developments relating to the effects of Material Adverse Change, or "MAC", clauses in the context of the recent Solutia and Genesco cases. Download Article...
March 2008
- Memorandum: Purchases of Bank Loans by a Borrower or its Sponsor
Can a borrower repurchase its own loan at a discount in today’s volatile secondary market? Because many bank loans now trade below par, a borrower (or a borrower's equity sponsors) may be tempted to purchase the borrower's loans in the...
March 2008
- Memorandum: ISDA's Evolving Auction Methodology Cash Settlement of Loan Credit Default Swaps
The deterioration in the credit markets over the past year has caused buyers of credit default protection increasingly to worry about their ability to realize the "recovery value" of the assets underlying the derivative transaction from their counterparty promptly after...
March 2008
- Publication: Distressed Debt Investor - "Debt Decoupling - What Are the Implications?"
Our partner, Jon Kibbe, argues that the conflicts between capital marker risk-spreading and decoupling of ownership interests are not new, and contends that the resolution of the concerns raised by decoupling because of the dynamic growth of the credit derivatives...
March 2008
- Briefing Note: Just Released -- US Government Accountability Office Report on Hedge Funds
On February 25, 2008, the US Government Accountability Office (GAO) – self-described as “the investigative arm of Congress” – released to the public its long-awaited Hedge Funds Report. The key question in many observers' minds was whether the GAO Report...
February 2008
- Memorandum: Recent S.D.N.Y. Opinion Further Restricts the Use of Selective Waivers
On February 14, 2008, a federal district court in the Southern District of New York issued an opinion, In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS) (S.D.N.Y. Feb. 14, 2008), that further restricts the applicability of selective...
February 2008
- Memorandum: LSTA Distressed Participation Agreement
On October 24, 2007, the LSTA issued a new standardized participation agreement for distressed trades ("DPA"), giving market participants an important new form document for settling distressed trades by participation. Below is a brief memorandum, written by our attorneys Paul...
February 2008
- Memorandum: Federal District Court Holds That SEC Action For Aiding And Abetting Under Exchange Act Section 20(e) Requires "Actual Knowledge"
A federal district court in the District of Columbia recently rejected arguments by the SEC that it need only show “extreme recklessness” to state a claim for aiding and abetting a violation of the federal securities laws under section 20(e)...
February 2008
- Memorandum: Subprime and Credit Crisis Practice at RK&O
Distress in the U.S. subprime mortgage market is reverberating worldwide and has had an unprecedented impact on the global credit markets. The crisis has spread to the corporate credit markets and is straining Collateralized Debt Obligation vehicles ("CDOs") and Collateralized...
February 2008
- Memorandum: Recent Development Relating to MAC Clause - MAC Clause Asserted to Prevent Liability for Exit Financing in Solutia Bankruptcy Proceeding
Material Adverse Change, or "MAC", provisions have been increasingly used by investors in leveraged buyout situations to avoid liability in the case of a broken deal. This week, in a case arising from the Solutia Inc. bankruptcy proceedings, Solutia Inc....
February 2008
- Publication: New York Law Journal Publishes - Monitors Can Foster Reform, Credibility
Our partner, Lee S. Richards, writes that the legal and practical limits of a corporate monitor's role, how a corporation facing possible indictment may narrow the monitor's function and how one knows when that function has been fulfilled are all...
February 2008
- Memorandum: A Third District Court Has Dismissed SEC Claims Relating to Short Sellings and PIPEs
A third federal district court has now rejected the SEC’s contention that using securities obtained in a PIPE transaction to cover short sales in the PIPE issuer’s shares is an unlawful distribution of unregistered securities, dismissing with prejudice the SEC’s...
January 2008
- Memorandum: Cure Claims in Bankruptcy - Delphi Bankruptcy Case Raises Issues
Below is a memo written by our lawyers, Michael Friedman, Joon P. Hong and Keith Sambur regarding potential problems that purchasers of unsecured trade claims may face in the event such claims become “cure claims” in a bankruptcy case. The...
January 2008
- Memorandum: Delaware Chancery Court Limits Liability to Break Up Fee in Merger Termination
Below is a brief client update written by our partners Craig Newman and Patricia O'Prey regarding a recent decision relating to the termination of a merger agreement and the resulting monetary liability. In United Rentals, Inc. v. RAM Holdings, Inc....
January 2008
- Memorandum: Recent Decisions on Short Selling and PIPEs: Section 5 Claims Dismissed, Insider Trading Claims Survive
On January 2, 2008, in SEC v. Lyon (06-Civ.-14338) (S.D.N.Y.), the district court rejected SEC claims that Gryphon Partners LP and related entities and their managing partner had engaged in several unregistered public distributions of securities in violation of Section...
January 2008
- Publication Regarding Hedge Fund Best Practices Initiatives
Below is a white paper that our partners Lucinda McConathy and Patricia O'Prey wrote with Charlotte Luer, of LJH Financial Marketing Strategies, LLC, summarizing recent initiatives in the United States and the United Kingdom regarding Hedge Fund Best Practices. The...
December 2007
- Publication Regarding Hedge Fund Marketing in an Era of Regulatory Uncertainty
Marketing a hedge fund involves a myriad of considerations, including compliance not only with the regulatory requirements and restrictions of the jurisdiction in which the hedge fund is domiciled but also the requirements and restrictions of each jurisdiction in which...
November 2007
- Memorandum Regarding Bear Stearns Bank plc v Forum Global Equity Ltd.
The recent decision of the English High Court in Bear Stearns Bank plc v. Forum Global Equity Ltd. [2007] established that parties to a distressed debt transaction concluded a binding oral contract at the time of the telephone conversation when...
November 2007
- Memorandum Regarding Incremental Loan Facilities: Key Provisions
Many syndicated loans provide for incremental loan facilities, also known as "accordion features," which permit a borrower to borrow additional loans under its credit agreement. Below is a short memo describing certain key provisions, including pricing, dilution and covenant compliance,...
November 2007
- Memorandum Regarding Employers Need To Revisit E-Mail Policies In Light Of Court Decision Rejecting Attorney-Client And Work Product Privileges
In what may be the continuation of a troubling trend to narrow the application of the attorney-client privilege over electronic communications, a recent NYS Supreme Court case, Scott v. Beth Israel Medical Center, --N.Y.S.2d --, 2007 WL 3053351 (N.Y. Sup....
November 2007
- Memorandum: European Leveraged Loan Credit Default Swap
The ISDA Euro LCDS product commenced trading in the market beginning August 6, 2007. Although predicated upon the terms of its European predecessor and informed by the development of its U.S. counterpart, the ISDA Euro LCDS is a unique loan...
October 2007
- Memorandum: Tranched Loan-Only Credit Default Swap Index
The market for loan credit default swaps (LCDS) continues to evolve at a rapid pace. Since the May 2006 launch of the single-name LCDS, the product has shifted from physical to cash settlement through the introduction of market-wide cash-settlement auction...
October 2007
- Memorandum Regarding Strategies For Addressing The Eroding Attorney Client Privilege For In-House Counsel
A recent federal district court decision, which significantly limits the application of the attorney client privilege over electronic communications between in-house attorneys and their fellow employees, may signal an important and potentially worrisome trend. Daniel C. Zinman has written a...
October 2007
- Memorandum Regarding Big Boy Provisions in Distressed Debt Trading
Two recent settlements in civil lawsuits have cast further doubt upon the enforceability of "Big Boy" letters used in securities transactions even between sophisticated parties. Are "Big Boy" letters any more enforceable in non-securities transactions, such as trades in bank...
October 2007
- Enron Update: District Court Reverses Bankruptcy Court Decision -- Equitable Subordination Risk Does Not Travel with the "Sale" of a Claim But Does Travel with an "Assignment" of a Claim
Below is a brief summary of the decision of the District Court reversing the Bankruptcy Court's ruling regarding the equitable subordination and disallowance of bank debt claims in the Enron Corp. bankruptcy proceeding. The issues raised by the decision are...
August 2007
- Enron Update: District Court Holds Hearing in Appeal of Bankruptcy Court Decision that Equitable Subordination Risk Travels with the Claim
Download Memo Download Appellant Citibank's Opening Brief Download Appellee Enron's Response Brief Download Appellant Citibank's Reply Brief Download Industry Amici Brief Download Industry Amici Reply Brief Download Amicus Brief by Abrams Capital, et al....
August 2007
- Between markets, competition is all. By Michael Mann. Published by the Financial Times on June 12, 2007.
A consensus is embracing a new solution to the challenges posed by the integration of global securities markets: mutual recognition. Today, the Securities and Exchange Commission will hold a round-table discussion to consider how to assess regulatory comparability and its...
June 2007
- Enron Update: District Court Affirms In Part and Reverses In Part Earlier Ruling Granting Appeal of Bankruptcy Court Decision that Equitable Subordination Risk Travels with the Claim
Memorandum to Clients and Friends of the Firm Regarding Enron Update: District Court Affirms In Part and Reverses In Part Earlier Ruling Granting Appeal of Bankruptcy Court Decision that Equitable Subordination Risk Travels with the Claim Download Memo...
May 2007
- Memorandum Regarding Recent Decision Entering Temporary Restraining Order Barring Secondary Market Purchasers of Loan Participations from Bringing Tort Claims Against Agent Bank
Memorandum to Clients and Friends of the Firm Regarding Recent Decision Entering Temporary Restraining Order Barring Secondary Market Purchasers of Loan Participations from Bringing Tort Claims Against Agent Bank Download Memorandum Download Order...
March 2007
- Distressed Debt - Here to stay
The trends of 2006 show how the market will adapt and grow over the coming years. Download Article This article is reprinted with permission from the March 2007 edition of International Financial Law Review. Link to International Financial Law Review's...
March 2007
- Challenges For Operating Cross-Border Investment Businesses: Meeting Compliance Expectations on a Global Scale
Article regarding Challenges For Operating Cross-Border Investment Businesses: Meeting Compliance Expectations on a Global Scale by Michael D. Mann and William P. Barry. Download Article...
February 2007
- Memorandum to Clients – Secondary Loan Purchasers Challenge Enron and Win an Extraordinary Appeal: Does Equitable Subordination Risk Travel with the Loan?
Memorandum to Clients and Friends of the Firm Regarding Recent Opinion and Order on Equitable Subordination – Secondary Loan Purchasers Challenge Enron and Win an Extraordinary Appeal: Does Equitable Subordination Risk Travel with the Loan? Download Memorandum Download Opinion and...
September 2006
- New Pension Act Makes Important Changes Affecting Investment Funds with Benefit Plan Investors and Those Who Trade with Them
Download file...
August 2006
- Memorandum to Clients – LMA Note Regarding the Treatment of Confidential and Price Sensitive Information
Memorandum to Clients and Friends of the Firm Regarding LMA Note Regarding the Treatment of Confidential and Price Sensitive Information Download Memorandum Download Exhibit A to Memorandum Download Exhibit B to Memorandum...
April 2006
- Equitable Subordination Risk Follows Claims
ABI Finance and Banking Committee Newsletter, March 2006; Volume 3; Number 1...
March 2006
- Developments in the Internationalization of Securities Enforcement Part II
The International Lawyer, Winter 2005; Volume 39; Number 4; ABA Section of International Law Download file...
January 2006
- Developments in the Internationalization of Securities Enforcement
The International Lawyer, Fall 2005; Volume 39; Number 3; ABA Section of International Law Download file...
December 2005
- Memorandum to Clients – Equitable Subordination Risk Follows Claims
Memorandum to Clients and Friends of the Firm Regarding Recent Decision on Equitable Subordination – Equitable Subordination Risk Follows Claims Download Memo Download Decision...
December 2005
- Publication: The Sarbanes-Oxley Act's Effect on Section 523 of the Bankruptcy Code - Are All Securities Laws Debts Really Nondischargeable?
The Sarbanes-Oxley Act's Effect on Section 523 of the Bankruptcy Code: Are All Securities Laws Debts Really Nondischargeable?, 11 Am. Bankr. Ins. L. Rev. 561 (2003) Download Document...
December 2003
