Delaware remains the most popular jurisdiction for the domestic formation of private equity and venture capital funds as either a limited partnership or limited liability company. In fact, 54.8% of the deals closed by Cadwalader in 2023 had a Delaware component. A myriad of reasons could be cited as the basis for this fact, but lenders are generally fine with this choice based on specific protections a lender is afforded under Delaware statutory law related to the obligations of an investor to a Fund. In particular, Title 6, Section 17-502(a)(1) of the Delaware Code provides “Except as provided in the partnership agreement, a partner is obligated to the limited partnership to perform any promise to contribute cash or property or to perform services, even if that partner is unable to perform because of death, disability or any other reason.”
Even more important, an Investor’s obligation to honor its promise to make capital contributions expressly extends for the benefit of creditors and Delaware law provides a statutory basis for a lender to assert a reliance claim to avoid a financial loss.
Cadwalader partner Angie Batterson authored an article, “The Dynamics of Insurers as Lenders in the NAV Market,” which appeared in the May 2024 edition of Butterworth’s Journal of International Banking and Financial Law, a LexisNexis publication.
The article explores the factors attracting insurance companies to the NAV financing space and some typical deal terms. Read it here (subscription required).
The US Diversity in Fund Finance Committee of the Fund Finance Association held the latest event in their Boundary Breaker speaker series this week. The event, co-sponsored by Haynes Boone and Standard Chartered, was a great success with ~40 attendees to hear an insightful conversation with Henry Tang, Co-Founder of the Committee of 100, and Vicky Du, Global Head of Fund Finance at Standard Chartered Bank. Henry and Vicky discussed Henry’s long and storied career. Henry was one of the first Asian-Americans on Wall Street, and he spent time working across the largest Wall Street investment banks including Salomon Brothers, Lehman Brothers, and Prudential.
Cadwalader partners Samantha Hutchinson and Wes Misson co-authored “Fund Finance: Past, Present and Future,” which appeared as a chapter in the 2024 edition of Lending & Secured Finance, published on May 28.
Register now to save your spot for an evening of networking with your fellow industry participants. The event includes a panel discussion spanning industry viewpoints, all while enjoying light beverages and bites.
A continuation fund is an entity fund set up by a sponsor in order to purchase an asset (or assets) from an existing fund managed by that sponsor. There are a number of reasons as to why a sponsor would want to pursue this strategy compared with a third-party sale, and a common consideration is that the existing fund is nearing the end of its term and the asset(s) subject to the sale may not reach the desired price in the current challenging exit environment and/or the sponsor and certain investors feel that the particular asset(s) are cash generative and are likely to increase in value with a continued hold by the sponsor combined with follow-on investments.
In this week's Fund Fanatics episode, hosts Scott Aleali and Jeff Maier speak with Jed Johnson, Head of GP Solutions at ORIX USA.
Women in Fund Finance (Chicago) and Sidley are delighted to invite you to a substantive networking session. “Stay in the Loop” offers an immersive networking experience with rotating discussions of topics at the intersection of private credit and fund finance moderated by Chicago industry leaders, all while enjoying light drinks and bites.