As private-equity backed portfolio companies work through the effects of the last several years of economic challenges, including continuing elevated interest rates, they may find themselves in need of covenant relief,...more
The Federal Reserve Bank (the “Fed”) and the U.S. Department of the Treasury (the “Treasury”) announced preliminary details for the Main Street Lending Program (the “MSLP”) on April 9, 2020. Additional details and guidance as...more
The process of identifying and implementing a new benchmark rate of interest to replace LIBOR for U.S. Dollar-denominated loans is underway. On account of the widely reported charges of manipulation in connection with the...more
A recent decision by the Superior Court of the State of Delaware highlights a risk of potential exposure to liability for individuals affiliated with private equity firms who are presumed to be covered by a directors’ and...more
7/11/2019
/ Acquisition Finance ,
Board of Directors ,
Breach of Duty ,
But For Causation ,
Capacity Allocation ,
Capital Structures ,
Contract Terms ,
Corporate Executives ,
Corporate Restructuring ,
D&O Insurance ,
Debt ,
Denial of Insurance Coverage ,
Directors ,
Duty of Loyalty ,
Fiduciary Duty ,
Policy Exclusions ,
Popular ,
Portfolio Companies ,
Private Equity ,
Private Equity Firms ,
Repurchases ,
Risk Assessment ,
Risk Mitigation ,
Self-Dealing ,
Wrongful Acts
Those seeking to purchase assets or a business out of a Chapter 11 case employing a “loan to own” strategy may well have received a boost from a recent decision of the U.S. Court of Appeals for the Ninth Circuit....more
2/13/2019
/ Acquisition Finance ,
Appeals ,
Asset Purchaser ,
Bad Faith ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Dual Class Share Structures ,
Global Market ,
Majority Voting Policies ,
Mortgage Lenders ,
Private Equity ,
Reaffirmation ,
Reorganizations ,
Reversal ,
Split of Authority
In an overlooked aspect of the recent New York Court of Appeals decision in Cortlandt St. Recovery Corp. v. Bonderman1, New York’s high court has allowed direct claims to move forward against two private equity firms for the...more
9/21/2018
/ Acquisition Finance ,
Alter Ego ,
Appeals ,
Bonds ,
Breach of Contract ,
Debt ,
Dismissals ,
Fraudulent Conveyance ,
Global Market ,
Indenture Trustee ,
Insolvency ,
NY Appellate Court ,
Piercing the Corporate Veil ,
Portfolio Companies ,
Private Equity ,
Private Equity Firms ,
Reversal
The question of when parties to a potential transaction actually become bound to each other is obviously an important one, and sometimes the answer can be surprising, or less than entirely clear. A recent Texas Court of...more
4/5/2018
/ Acquisition Finance ,
Acquisitions ,
Appeals ,
Bids ,
Borrowers ,
Breach of Contract ,
Confidentiality Agreements ,
Contract Formation ,
Contract Negotiations ,
Contract Terms ,
Dismissals ,
Email ,
Ground Leases ,
Lenders ,
Meeting of the Minds ,
Oil & Gas ,
Reversal ,
Reversible Error ,
Sellers
A delicate balance has evolved over time in leveraged acquisitions with respect to the nature of the contractual relationship between a target and its owners, on the one hand, and the debt financing sources of the buyer, on...more
10/5/2017
/ Acquisition Finance ,
Appeals ,
Bonds ,
Breach of Contract ,
Buyers ,
Competitive Bidding ,
Contract Drafting ,
Contract Terms ,
Credit Agreements ,
Debt Financing ,
False Statements ,
Lenders ,
Leveraged Buyout ,
Negligent Misrepresentation ,
Private Equity ,
Refinancing ,
Reversal ,
Sellers ,
TX Supreme Court
Basic to any acquisition and its financing are the projections of the target’s future performance. These play a key role in setting the price for the target as well as on the availability of acquisition financing. Projections...more
When a portfolio company underperforms, an equity sponsor will want to assess the degree of negotiating leverage the company’s lenders have against the company under the circumstances, which can play a significant role in...more
4/12/2017
/ Acquisition Finance ,
Appeals ,
Bankruptcy Court ,
Bondholders ,
Breach of Contract ,
Chapter 11 ,
Commercial Bankruptcy ,
Consent ,
Debt Restructuring ,
Default ,
Forbearance Agreements ,
Lenders ,
Post-Bankruptcy Covenants ,
Remedies ,
Subsidiaries ,
Trust Indenture Act ,
Vessels
A recent Delaware bankruptcy court decision may potentially place at risk an equity sponsor’s ability to retain proceeds from the sale of a portfolio company whose performance later deteriorates, where the selling sponsor...more
Private equity sponsors should be aware of two recent court decisions. One involves fiduciary duties under state law that may be owing to a limited liability company borrower by its managers, in the context of receivables...more
Two recent court decisions may result in a broadening of the range of options available to an equity sponsor in respect of an insolvent portfolio company. The first decision may provide increased flexibility in structuring...more
1/18/2016
/ Absolute Priority Rule ,
Acquisition Finance ,
Board of Directors ,
Breach of Duty ,
Business Judgment Rule ,
Chapter 11 ,
Creditors ,
Debtors ,
Fiduciary Duty ,
Insolvency ,
Portfolio Companies ,
Private Equity
When a portfolio company underperforms, a sponsor may consider various options to address the perceived performance issues, including changes to a portfolio company’s management team, cost structure, capital structure or...more
10/16/2015
/ 363 Sales ,
Acquisition Finance ,
Bankruptcy Code ,
Bonds ,
Borrowers ,
Chapter 11 ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Lenders ,
Loan Agreements ,
Private Equity ,
Private Placements ,
RadioShack ,
Rule 144A ,
Trust Indenture Act
As we discussed in a prior newsletter, the evolving landscape for regulated financiers under the Leveraged Lending Guidance1 promulgated by the Federal Reserve Board, FDIC and OCC has increased uncertainty for regulated...more
Recent legal and regulatory developments have raised issues for those considering a loan-to-own acquisition strategy, and have continued to impact both the structure of highly leveraged financings and the makeup of those...more
Several recent legal and regulatory developments in the U.S. will likely alter the makeup of the group of arrangers and financiers willing to arrange and provide financing for certain highly leveraged transactions, and also...more
Several recent legal developments will likely impact acquisition finance.
A recent decision of the U.S. Bankruptcy Court for the Southern District of New York examines who is an “Eligible Assignee” entitled to acquire...more
In This Issue:
- ILPA Guidelines Have Noticeable Impact
- Extracting Tax Value in Debt Refinancings and Modifications
- Private Equity and Venture Capital Investing in China: Exit Strategy and Circular 698
-...more
Certain recent legal developments will likely impact acquisition finance. This article will survey some of the more notable ones.
We discussed in the last newsletter the Eleventh Circuit Court of Appeals’ decision in...more