Second Circuit upholds SDNY’s finding that under Reves syndicated loans are not securities under federal law.

Introduction -

On August 24, 2023, the US Court of Appeals for the Second Circuit issued its highly anticipated decision in the case of Kirschner v. JP Morgan Chase Bank N.A., et al. The three-judge panel unanimously upheld the district court’s decision, and affirmed the long-standing market convention and expectation that syndicated term loans are not securities. This Client Alert discusses the Second Circuit’s decision, and provides some key takeaways for loan market participants in light of the decision. Above all, market participants should take care to continue to follow market practices designed to assure that syndicated loans are not mischaracterized as securities.