Although we all still remember the after effects of the 2007-08 financial crisis, we’re actually still feeling the impact of the Great Depression in our loan documents. The Crash of ’29 was precipitated in part by margin lending, a popular tool in the early 1900s to enhance infrastructure investments by allowing the purchase of stock with borrowed funds where the stock acted as collateral for the loan. A rush on margin calls as stock prices collapsed wiped out fortunes and eventually led the Federal Reserve Board to issue margin regulations. Better known to fund finance practitioners as Regulations T, U and X, they appear almost universally in our credit agreements and opinions. This article provides an introduction to these regulations and how they may be related to fund finance transactions generally. Although note that certain fund finance transactions require a deeper dive into the margin regulations. Stay tuned!
Conservative structures that prioritize debt repayment and limit leverage supported consistent performance for Fitch rated PE CFOs in recent months despite a decline in distributions. Overcollateralization and improving liquidity ratios (distributions to capital calls) are expected to support deal performance in 2024. The full report is available via subscription here.
We're thrilled to announce the 8th Annual Cadwalader Finance Forum will take place on Wednesday, October 23, in Charlotte.
Women in Fund Finance EMEA and Maples Group are pleased to invite you to the first WFF Industry Gathering in Ireland.
Join Scott Aleali, Head of Private Equity Finance at Citizens Bank, and Jeff Maier, Senior Managing Director - Private Equity Finance at Citizens Bank, with special guest Neil Keegan, Co-Managing Partner and CEO of Marlinspike, for the latest episode of Fund Fanatics!
Secondaries, GP stakes and private credit: Here’s a look at what we’re reading this week.
On March 21, the Federal Deposit Insurance Corporation published for comment a proposal to revise its Statement of Policy on Bank Merger Transactions. In a recent Client & Friends Memo authored by Andrew Karp and Chris Van Heerden, we focus on how if adopted as proposed, the proposal would modify the Statement of Policy substantially, effectively creating an entirely new policy.
Read more here.
Join the Fund Finance Association for the first Women In Fund Finance Ladies Poker Night at the Hearst Tower in New York City, cohosted by Fitch Ratings, Deloitte and WFF.
One of the important components of the collateral package for a subscription finance facility is the lender’s perfected security interest in the fund’s bank deposit account into which the actual cash constituting the proceeds of the capital calls are deposited (frequently called the “collateral account”). As many of our readers and market participants are well aware, there are two avenues to perfecting a lender’s security interest in a collateral account in the U.S.: (1) entering a tri-party control agreement with the fund and the third-party account holder (establishing control pursuant to Section 9-104(a)(1) of the UCC); or (2) maintaining the collateral account in house at the lender’s institution (establishing control pursuant to Section 9-104(a)(2) of the UCC). However, what do you do if the fund cannot give a lender “control” using either of these methods because it has already ceded control to another bank?