Folks, last week I made the point that it’s extremely important to confront negative narratives about our industry before they take hold, creep into the interstices between things that are true and then somehow ossified into received wisdom. So, taking on board my own advice, which shockingly I find compelling, I want to sound the alarm about a recent Wall Street Journal story concerning the misstatement of net operating income in our industry (I only wish I could qualify as an influencer here. I read about two teens with millions of followers this weekend; they talk about stuff like..their hair. Is there anyone out there that wants to know about my hair?). Continue Reading
LIBORCast: Interest Rate Caps, Derivatives and Value Transfer with Chatham Financial
In the fourth installment of our new LIBORcast program, Matthew Hays and Jonathan Gaynor discussed interest rate caps, derivatives and value transfer with Chatham Financial’s Rob Mangrelli and Matt Hoffman. Tune in to hear about the cost of a SOFR interest rate cap, adoption of the ISDA protocol and rate fragmentation in the post-LIBOR market.
By the way, this podcasting thing might be catching on because you can hear Rick Jones speaking about the challenges of driving engagement with and the complexity of the LIBOR transition on last week’s Bankshot podcast.
There’s a New Black Swan in Town and It’s After Us!
We have virtually no bandwidth to deal with anything other than the pandemic, do we? The marches of every conversation begin with “you’re okay, I trust” and end with “take care” and now we really mean that. It’s exhausting, isn’t it? It’s hard to even remember the “time before.”
Volcker Rule Amendment: Trending Towards Flexibility
After much anticipation and expectation, on June 25, 2020, the Federal Reserve Board, CFTC, FDIC, OCC, and SEC (the “agencies”) finalized an amendment to Section 13 of the Bank Holding Company Act, commonly known as the Volcker Rule, which among other things prohibits banking entities from sponsoring or acquiring ownership interests in “covered funds.” Covered funds are entities that would be investment companies but for exemptions provided under Sections 3(c)(1) or 3(c)(7) of the Investment Company Act, and generally include private equity funds and hedge funds. The final rule, which goes into effect on October 1, mostly follows what the agencies had signaled to everyone back in the mask and quarantine-free days of January when it released proposed changes that are largely adopted in the final rule. Continue Reading
Dechert OnPoint: SEC Publishes OCIE Risk Alert on LIBOR Transition Preparedness Examination Initiative
Regulators have been increasing their scrutiny of LIBOR transition efforts as they ramp up messaging stressing that the time to act is now. The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) issued a National Exam Program Risk Alert to introduce a LIBOR Examination Initiative on the upcoming discontinuation of, and transition from, LIBOR and includes a detailed document request list. To read more about the OCIE’s Risk Alert check out this Dechert OnPoint. You can also stay up to date with key developments in the LIBOR Transition by following Dechert’s LIBOR transition page.
LIBORcast: A Discussion with the FCA
This week on the LIBORcast, Dechert’s series on all things related to the LIBOR transition, our very own Sarah Smith and Karen Stretch interviewed Helen Boyd and Nick Miller from the U.K.’s Financial Conduct Authority (the “FCA”). Continue Reading
Rick Jones on The TreppWire Podcast
Crunched Credit’s own Rick Jones spoke with the TreppWire team for their latest podcast. Covering everything from the future of CMBS to the Great Recession, the conversation was wide reaching. Be sure to tune in for more on Rick’s interview with Sam Zell, how we’re headed for a “square root” recovery and why this “light speed recession” isn’t the only problem facing commercial real estate. You can listen to the episode in its entirety here: Legal and Regulatory Challenges in CRE with Rick Jones.
Does the Golden Share need to follow the Golden Rule?
Everyone, including the least empathic in our society (aka, lawyers), knows that we should seek to uphold the golden rule and “do unto others…” with respect to family, friends, and acquaintances, but does this also apply in the corporate world? Apparently so, as a Delaware bankruptcy court just ruled that preferred shareholders with a bankruptcy-filing blocking right (also known as a “Golden Share”) must consider the effects on other shareholders and all other creditors when exercising such right. This bench ruling departed from the path taken by the Fifth Circuit, which had concluded that a minority shareholder’s blocking right, as exercised, did not impose a fiduciary duty on the shareholder. The Delaware court, in splitting from the Fifth Circuit, reasoned that federal public policy requires courts to look at what is in the best interest of all parties and prioritizes debtors’ constitutional right to file bankruptcy over the bankruptcy-filing blocking right explicitly granted in corporate governance documents. Continue reading for our take on why this split is so noteworthy, particularly for shareholders considering whether to exercise a Golden Share: Delaware Bankruptcy Court Diverges from Fifth Circuit: Minority Shareholder’s Blocking Right Invalidated and Fiduciary Duty Imposed.
Original[s] Sin
The closing deadline is quickly approaching! Which of the following two processes would you choose? Would you:
(a) create a pdf of signature pages and request that parties provide a digital signature and return via email, or
(b) print out multiple sets of paper copies of each signature page for each transaction document in triplicate, then… ship each signature page packet to each signatory for the transaction (sending in tandem, an email with the overnight delivery tracking numbers) with a pre-addressed and prepaid return envelope and instructions to sign and return on a very tight timeline with no room for error, then…wait by the mailroom for those signature pages to come back.
The Thoughts of (Chairman) Zell
I had the opportunity to interview Sam Zell last week on an iGlobal podcast. You can see it here. Fascinating. Okay, Mr. Zell might not be the undisputed master of 1.4 billion souls whose thoughts are obligatory reading, but his Thoughts should be accorded considerable weight by us denizens of the US economy. There’s a real difference between those who bloviate for a living (which would include me) and those who actually deploy capital based on their views and analysis of markets. I’ll pay considerably more attention to the latter. Continue Reading
