March 23, 2017 - On Wednesday, Bloomberg, WSJ and LCD – and nearly every other news outlet – warned that Sears had added “going concern” language to its latest filing with the SEC. On the news, Sears’ stock fell 12%.
March 23, 2017 - Yesterday, in In re Jevic, a case of enormous importance to the loan market, the U.S. Supreme Court ruled 6-2 that non-consensual “structured dismissals” that distribute estate assets in violation of the “absolute priority rule” are not permitted under the bankruptcy code. The decision underscores the importance of the absolute priority rule as a bedrock principle of U.S. bankruptcy, a principle that is at the heart of secured lending.
March 23, 2017 - Yesterday, there were two pieces of news on the settlement side. First, the SEC voted to adopt T+2 settlement for securities. Second, the January Effect on loan settlement times dissipated in February, returning us to the more typical times we have seen since the new delayed comp regime was implemented. (Of course, loan settlement times remain considerably wider than T+2, but the industry continues to work on tightening these times.) Below, we discuss both market and settlement trends in February.
March 20, 2017 - Over the past year, a once obscure issue took on huge significance in the oil patch. To wit, do gas-gathering contracts between “midstream” service companies and production companies (E&Ps) constitute real property interests? As Reed Smith notes in a recent client memo, a “gathering agreement refers to a contract that provides for collecting gas or other commodities at the point of production, and for moving it through a pipeline system to a junction with a pipeline’s primary transmission system”.
March 16, 2017 - Washington and Wall Street have been pondering tax reform plans – and now borrowers are doing so as well. Both the Trump and House Republican plans significantly reduce companies’ ability to deduct interest. For the loan market, there are (at least) two important impacts to consider. First, the impact on the companies themselves – i.e., whether the reforms make the companies more creditworthy. Second, how potential tax reforms impact companies’ demand for debt. Below, we review recent analysis on the impact of Trump and House Republican tax plans on U.S. companies, as well as how one company is preempting the issue.