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Recap of LSTA’s Fifth Installment of Recent Development in Bankruptcy Law

This week the LSTA hosted the fifth installment of our quarterly roundup of Recent Developments in Bankruptcy Law.  Rich Levin of Jenner & Block once again focused on a number of recent key cases for loan market participants.  The most important issue covered was the recent Supreme Court decision in In re Jevic where the Court ruled that non-consensual structured dismissals that distributed an estate’s property in violation of the absolute priority rule are prohibited.

In re Jevic: The Supreme Court Reaffirms the Absolute Priority Rule

Last week, in In re Jevic, the U.S. Supreme Court reaffirmed the most fundamental principle in bankruptcy – the absolute priority rule – while at the same time recognizing that flexibility in the bankruptcy process itself is essential.  It was a very important win for secured lenders.

Supreme Court: Absolute Priority Rule Applies Absolutely

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.

Amicus Roundup: On a Winning Streak

In the past year the LSTA weighed in as amicus curiae (friend of the court) in four cases of enormous importance to the loan market.  Happily, the results in the two cases decided so far have been decidedly good.  The two other cases have been fully briefed and argued and await decision in the next few months. The cases are recapped below.

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The Volcker Rule Amendments: What Do They Mean for CLOs

Earlier today the Federal Deposit Insurance Company (FDIC) and the Office of the Comptroller of the Currency (OCC) separately approved final rules amending rules originally published in November 2013 that implemented the Volcker Rule. Importantly, today’s amendments do not affect loans and CLOs. The FDIC signaled that amendments to the part of the Volcker Rule pertaining to CLOs would be forthcoming sometime in the future. Today’s amended rules are available here.

LSTA Newsletter: August 16, 2019

This week we cover LIBOR-Good News and Less Good News; Docs Terms of Use; Delayed Comp Docs Released; Loans Mag Announcement

Loans Magazine – Summer 2019 Edition

This edition provides members with valuable content on the latest developments in the syndicated loan market. An article from David Chmiel of Global Torchlight Limited which explores “Current Geopolitical Trends Impacting the Loan Market”. We continue with a series of articles on the many aspects of the LIBOR/SOFR transition, an analysis of the secondary loan […]

LIBOR Fallbacks: Good News… and Less Good News

There is good news – and less good news – on LIBOR fallback language in cash products like loans, FRNs and CLOs. On the good news front, it looks like most cash products are now including fallback language in new deals. This is critical because many instruments will be outstanding when LIBOR ends after 2021, and if they don’t have good fallback language, there could be contract frustration (and litigation). However, on the less-good-news front, the fallback language is not always consistent (which may lead to a lot of work to determine exactly how each instrument would fall back) or workable en masse (which may lead to traffic jams as everyone tries to amend their deals at the same time). We discuss the fallback status of FRNs and loans below. (And we’d gently remind readers that several CLOs have gone “hardwired”, per LCD and Covenant Review).