When should a prospective investor consider trading on an “assignment only” basis? What are the consequences of omitting a disgorgement indemnity from a proceeds letter when loans are repaid in an out-of-court restructuring? Does a proscription against assigning loans to competitors of the borrower extend to affiliates of the potential assignee?
For 27 years, narrowly focused on helping our hedge fund, registered investment company and other institutional buyside clients realize value, manage risk and think through issues in the distressed loan and bankruptcy claims markets.
How can a purchaser of distressed loans preserve its right to elect the consideration it will receive under a Chapter 11 plan when the distribution record date passes before the purchase of loans has closed? How is the risk that prior lender paydowns will be avoided as fraudulent transfers or preferences allocated under the LSTA distressed loan documentation regimen? What legal due diligence should a prospective purchaser of distressed loans or bankruptcy claims complete prior to the trade date? How does the absence of a market-standard trade claim assignment form impact how a bankruptcy claim should be traded? Can an oral agreement to trade bank loans be enforced under New York law as an integrated “Type I” agreement even if the parties never execute a trade confirmation? What steps can the purchaser of a participation in a distressed bank loan take to avoid having its vote on a plan of reorganization diluted?