The Regulatory State: May We Have A Little Humility, Please?

iStock_000053495504_XXXLargeThe Great Equity Correction of 2015 that is now being enjoyed by all of us is a correction, and not the beginning, of the Great Bear Market of 2015 (from my lips to God’s ears). It reminds me of just how little we know about how all complex systems, like the global financial market (and don’t get me started on climate), function. Nonetheless, our Regulatory State behaves as if this was not true and as if wise governmental types can simply declaim new rules and regulations to get their very specifically-designed outcomes.

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BDCs As Creditors of Distressed Companies: What You Need to Know

An increase of defaults and rising debts have Business Development Companies (BDCs) concerned as the trend may lead to a number of distressed credits within their portfolios. Specialists from Dechert and Houlihan Lokey will address these concerns and potential solutions which matter to BDCs during a webinar taking place on Wednesday, September 9. The webinar will focus on structuring issues  (e.g., portfolio eligibility, valuations, MIP implications, etc.), tax considerations (e.g., distribution requirements, qualifying or good income test, asset diversification, etc.) as well as bankruptcy and restructuring concerns. Continue Reading

MERS: Better Than a Faster Horse

MERSCORP, Inc. (“MERS”) has been under fire for years. We wrote about it a while back when residential mortgage borrowers challenged the ability of MERS to foreclose on mortgages it held on the theory that MERS, as a mere nominee to the lender, was not a real party in interest.  More recently, local recording offices have filed class action suits against MERS arguing that the MERS system prevented them from collecting fees supposedly required under state law.  Now there’s a sympathetic plaintiff!  In the past month, the Third Circuit and Fifth Circuit both rejected these arguments.

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Risk Retention Realized – Potential Solutions for CLO Market Participants

93850823-1In anticipation of the effective date of the Final Rule on December 24, 2016 (early Christmas gift?), CLO market participants have been constructing solutions that allow collateral managers to raise the capital necessary to support investments required by the Final Rule.

We have seen an increased use of a hybrid structure that has been referred to as the capitalized majority-owned affiliate (C-MOA) which may be structured to comply with EU and U.S. risk retention requirements.

What is a C-MOA?

The C-MOA hybrid draws from the CMV and MOA options, yet solves some of the perceived challenges presented in both structures. Attorneys at Dechert have devised two C-MOA structures – one where the C-MOA both originates loans to be sold to the CLO and manages the CLO and a second  where the C-MOA originates loans to be sold to the CLO but the CLO is managed by the existing collateral manager.

For more information regarding these C-MOA structures, please click here to read a recently published Dechert OnPoint. To receive future publications, please click here to add your name to the list.

More from Dechert

Capital Manager Vehicles Demystified

EBA and BOE Weigh in on EU Risk Retention

U.S. Risk Retention Final Rule: Capitalized Manager Vehicles, Majority Owned Affiliates and Other FAQs

Final Credit Risk Retention Rules Adopted for Asset Backed Securities and Residential Mortgage Backed Securities

U.S. Risk Retention Final Rule: Playing it Forward for CLOs

Risk Retention – How I Learned to Love Risk Retention and Live with it. (Apologies to Stanley Kubrick)

CRE Securitization: Rehabilitation Still In Progress

Photo credit: Chance Agrella / Hemera / Thinkstock

Volcker Rule – Five Years On

After years of delays, changes and significant debate, the Volcker Rule is now, largely, in full effect. Sold to a sometimes intellectually incurious Congress and the electorate as a central piece of legislation to limit systemic risks to the financial system, the Volcker Rule, among other things, prohibits “banking entities” from engaging in proprietary trading activities and acquiring or retaining “ownership interests” in (or acting as sponsors of) certain “covered funds.” Continue Reading

Risk and Rewards of CRE-CLO and CLO Securitizations: Navigating the Capital Markets

93850823-1More than 100 senior executives participated in Dechert’s Risk and Rewards of CRE-CLO and CLO Securitizations: Navigating the Capital Markets seminar.  The half day event, supported by  CRE Finance Council (CREFC) and the Loan Syndications and Trading Association (LSTA), focused on themes important to the CLO market and the CRE securitization market.  Panelists addressed market issues, structure and structural issues as well as regulatory and tax considerations.

Very senior and knowledgeable panelists from institutions including  Wells Fargo Securities, Crescent Capital, Guggenheim Partners, KPMG, Latitude Real Estate Investors, TCW, Western Asset Management Co. as well as government relations experts from both CREFC and LSTA discussed issues ranging from structural innovation, dealing with the new risk retention rules and market considerations relevant to sponsoring, issuing and investing in real estate and non-real estate CLOs.

To access a recording of the sessions, please click here.

Related Articles

Risk Retention – How I Learned to Love Risk Retention and Live with it. (Apologies to Stanley Kubrick)

CRE Securitization: Rehabilitation Still In Progress

Photo credit: Chance Agrella / Hemera / Thinkstock

Grexit Deferred: The End of the Beginning for Greece?

euroFor want of a baker, a job was lost.  For want of a job, the economy was lost.  For want of an economy, the banking system collapsed.  For want of a banking system – well, ultimately Grexit.

Grexit, Grexit, Grexit, Grexit, Grexit, Grexit, (China), Grexit, Grexit. The Greeks will be fine, right?  There is no such thing as contagion, right?  Your lips to God’s ear, please. As I write this, the Greek Parliament has approved the bailout and it looks like an immediate Grexit is off the table, (although the Germans are none too pleased)!  Wonderful. Continue Reading

Current Marketplace Trends in Real Estate Crowdfunding

iStock_000009267719_DoubleToday, there appears to be an ever-expanding number of sponsors and markets for crowdfunding.  Commercial real estate is no exception. At the recent IMN US Real Estate Opportunity & Private Fund Investing Forum, Elizabeth Braman, Chief Production Officer of Realty Mogul, presented at a session focused on crowdfunding for real estate.  It was very well attended.  Dechert and CRE Financial Council (CREFC) recently hosted an equally well attended seminar in San Francisco featuring leaders in the field to discuss the current state of crowdfunding debt and equity real estate investments and that discussion, in our thinking, was illuminating about this fascinating, and perhaps fraught, new business. Continue Reading

US Real Estate Opportunity & Private Funds Investing Forum Recap

nyseThe 16th Annual U.S. Real Estate Opportunity & Private Funds Investing Forum was held in New York City on June 15 and 16, bringing together private real estate fund sponsors, limited partners, and other industry participants. Over two packed days of panels, networking, and “shark tank”-style panel demonstrations, industry participants shared their views on the current state of the commercial real estate market, fund raising and predictions (from a fund investor’s perspective) for the near future. Continue Reading

The EB-5 Visa Program: the Rebirth of the Immigration Investor Program


This is a good news story for once.  But, of course, since the father of this soupcon of good news is our government, it’s almost unintended.

From the ashes of the economic recession of 2008 came the rebirth of the Immigration Investor Program, more commonly known as “EB-5 Visa Program.”  This bit of social engineering has been around since the program was first introduced back in 1990 but got a second wind when everything else went to Hell.  The purpose behind the program was to benefit the United States economy by attracting investments from qualified foreign nationals. Continue Reading