What happens when a majority owner makes a bad-faith capital call?
Podcast: Fund Subscription Facilities: Key Considerations for Limited Partners
EXECUTIVE SUMMARY: In a recent post-trial memorandum opinion, the Delaware Court of Chancery ordered specific performance of capital calls issued under a fund’s limited partnership agreement, reinforcing that capital...more
An operating agreement (for an LLC) or shareholders’ agreement (for a corporation) is where you and your partners decide how the relationship really works. Without it, New York’s default rules step in — and those rules...more
Joint ventures remain one of the most powerful tools in the modern business arsenal. In this five-part series, we will explore how, in a climate of geopolitical uncertainty and economic volatility, joint ventures have proven...more
Schulz Grp. GmbH v. Jamestown Premier Property Fund, L.P., C.A. No. 2024-0943-LWW (Del. Ch. June 17, 2025) - An investor committed $10 million to a commercial real estate development fund, acquiring partnership units in...more
The Institutional Limited Partners Association (ILPA) has released an updated Capital Call & Distribution Template (CC&D Template) to standardise the accounting details embedded in call and distribution notices and to align...more
The credit parties under a subscription credit facility may require flexibility in providing funds to their portfolio companies. Instead of using their own capital to make an equity investment in one of their portfolio...more
There is perhaps no provision in an LLC operating agreement more susceptible to abuse than one allowing those in control of the LLC to make mandatory capital calls. For one, that authority often comes with very few...more
On an aggregate basis, banking industry net revenue improved in Q1 despite flattish NIM on near-record non-interest income and expense improvements....more
I focus my practice on commercial litigation and in particular on representing business owners in disputes with their business partners. As part of my job I get to see a whole variety of ways that business people attempt to...more
Securitization has been a major focus in the fund finance industry as of late. Due to a confluence of factors, some of which are specific to fund finance, and some of which are features of the broader economic environment, it...more
Recallable capital has become an increasingly common concept in subscription credit facilities. In this Legal Update, we explain the concept of recallable capital and its role in subscription credit facilities, as well as...more
The primary purpose of a capital call facility is to provide bridge financing to a fund borrower that may be drawn upon, in lieu of calling capital, to make investments in accordance with the fund’s business purpose. In...more
There are many ways that an owner of a closely-held business can use their superior financial resources to gain an advantage over their co-owners in a dispute. One common way is the use of a capital call provision to dilute...more
Last week’s Cadwalader 2022 Finance Forum included a panel titled “Heading Into the Storm: Preparing to Survive and Profit from Turbulence in Finance Markets,” which brought together a panel of industry experts to discuss the...more
In this week’s Fund Finance Friday, we will discuss the mechanics around an investor’s right to pre-fund all or a portion of its capital commitment (“Pre-Funding Investor”). In a subscription-based lending facility, a lender...more
Nestled between Broadway and Church Street in New York City’s hottest neighborhood is the landmarked, stone-façade building at 66-68 Reade Street. Now marketed as the superluxury boutique condominium complex 66 Reade, the...more
Those of us who follow the Delaware Chancery Court’s output are regularly treated to lengthy, detailed, finely crafted opinions sometimes in excess of 100 pages. Opinions of that length from our New York state court judges...more
The security package for a subscription facility will typically include security over the uncalled capital commitments of a fund’s investors, including: (i) the right to make capital calls on investors in respect of their...more
As the universe of asset-based and hybrid facilities continues to expand, fund finance lenders are increasingly encountering pledges of equity interests issued by funds or SPVs domiciled in popular jurisdictions outside of...more
Who says email is more efficient and cheaper than regular mail? - Not the manager of the McGuire family real estate business after winning a lower court ruling only to see it reversed on appeal last month in a decision...more
In recent months, we have seen several requests to include a swingline facility in the capital call loan documentation for syndicated facilities. Swingline loans are normally made available as a component of a revolving...more
Those involved in the private equity industry will have seen the recent reports of an alleged fraud on a U.S. bank by a Florida-based private equity fund manager, the accusation being that subscription agreements with LPs, as...more
This Q&A attempts to answer some questions that may be on the mind of private equity sponsors who are nervous about the reactions of their LPs to the current crisis. Can our LPs terminate our fund? You need to check...more
The case of Shapiro v Ettenson ranks as one of the more consequential ones in the realm of New York’s LLC jurisprudence....more