For example, the CFTC has issued no-action letters exempting from the definition of commodity pool certain securitisation entities that are operated consistent with SEC Regulation AB or Investment Company Act Rule 3a-7. In this structure, one SPE acts as the depositor (typically structured as an LLC) and the other SPE is the issuer (typically structured as a trust). Prenetics' Business Combination with Artisan Acquisition Corp. Shearman & Sterling is representing the placement agents on the PIPE in connection with Prenetics Group Limiteds business combination with Artisan Acquisition Corp. Qxpresss Acquisition of KorChina Logistics Holdings Limited. At the time the ARRC fallback recommendations were released, term SOFR rates were purely theoretical: SOFR was primarily an overnight rate, measuring the cost of borrowing cash overnight as collateralised by US Treasury securities in the repurchase agreement market. During the amendment process, it came to the attention of market participants that the SEC was taking the position that the rule applies, and has always applied, to fixed-income securities. The servicer typically also produces periodic reports and interfaces with the trustee to ensure the correct application of funds in accordance with the applicable priority of payments waterfall. Number of lawyers worldwide: 800+. DaFa Properties Group Limiteds $100 million Senior Notes Offering. The general counsel's comprehensive guide | Hong Kong, 76 items provided by Shearman & Sterling LLP. Robert Rudnick is especially active in tax controversy. Starting on 3 June 2019, they have transitioned to a single security and single securitisation platform initiative referred to as Uniform Mortgage-Backed Securities (UMBSTM). Applications for 2022 vacation schemes were high; the firm received around 2,000 applications for its 15 training contract vacancies. Ltd. on its acquisition of Korchina Logistics Holdings Limited. The minimum risk weight that will be given to a securitisation exposure is 20%. Ginnie Mae does not itself issue MBSs, but instead provides a guarantee, backed by the full faith and credit of the US government, of securitisations by participating institutions of government-insured mortgages. the transferor has rights in the relevant asset, or the right to grant rights in the relevant asset; and. In determining whether a transfer is a true sale or a disguised loan, courts look to a number of factors. The DoddFrank Act had the effect of causing swaps to be included in the definition of commodity pool under the CEA and under the definition of security for purposes of the Securities Act and the Exchange Act. The presence or absence of some or all of these factors does not necessarily result in substantive consolidation. The District Court subsequently granted a motion for an interlocutory appeal, which was granted by the US Third Circuit Court of Appeals on 3 May 2022. It is important to note that the issue before the Third Circuit is whether the Trusts are indeed covered persons and thus could be vicariously liable for the conduct of their agents, the servicers. The DoddFrank Act introduced a mandate to the SEC and the bank regulatory agencies to promulgate rules requiring securitisers to retain credit risk, which are codified in the relevant sections for the relevant banking regulator (12 Code of Federal Regulations (CFR) part 43 for the Office of the Comptroller of the Currency; 12 CFR part 244 for the Federal Reserve System; 12 CFR part 373 for the Federal Deposit Insurance Corporation (FDIC); 12 CFR part 1234 for the Federal Housing Finance Agency; and 12 CFR part 373 for the SEC (the latter is also referred to as Regulation RR)). The courts have also identified a variety of other factors that do not fall within the categories above but may be indicative of a secured loan, including: Some states have sought to bolster securitisations by restricting recharacterisation of a purported sale transaction. The servicer will typically be responsible for collecting payments under, and ensuring that the issuer complies with, the obligations relating to the collateral. An SPE that is organised as a partnership or an LLC that has elected to be treated as a partnership for tax purposes would not be subject to entity-level tax, but transfers to a securitisation SPE that is treated as a partnership for tax purposes may have different tax consequences than transfers to a disregarded entity and, as such, it is possible to structure the SPE (and use a multi-SPE structure) so as to optimise the securitisation for the desired tax neutrality. The form also gives trainees the option of requesting a secondment. Section 3(c)(7) provides a general registration exemption for issuers that do not publicly offer their securities and limits their investors to qualified purchasers. Shearman & Sterling LLP 20 ans Partner janv. The structure also allows for some series to be in their revolving period while other series are in their amortisation period. Graduate Recruitment Manager. While the ARRC suggests that the first alternative should be a forward-looking term SOFR with a matching term to LIBOR, no such rates were available at the time the ARRC released its recommendations. in certain securitizations that hold underlying business loans or other assets that reference the SOFR Term Rate and where those assets cannot easily reference other forms of SOFR. Competition for training contracts at Shearman & Sterling is increasingly fierce. The firms success is built on its clients success. Apr 2015 - Jan 20193 years 10 months. In fact, many of these elements are present in most bankruptcy cases involving holding company structures or affiliated companies without thereby leading to substantive consolidation. In a recent case, Shearmans international arbitration group represented Swiss bank EFG in a dispute over the banks alleged participation in a fraudulent scheme that resulted in the bankruptcy of an insurance company in Taiwan.. Morgan Lewis lawyers wrote the books that structured finance lawyers rely on: Offerings of Asset-Backed Securities and The Federal Securities Law of Asset-Backed Securities. The qualities on which rankings are assessed include technical legal ability, professional conduct, client service, commercial astuteness, diligence, commitment and other qualities most valued by clients. The extent to which regulators will address securitisation industry feedback on rules that are not yet final remains to be seen. The issuer will receive cash flows from the permitted investments and the CDS protection premiums. The perfection of a security interest in a financial asset automatically also perfects a security interest in related supporting rights, such as collateral or letter of credit rights. The proposed rules would also prohibit private fund advisers from engaging in certain compensatory and other practices which have the effect of creating conflicts of interests between private funds and their advisers. Follow Shearman & Sterling on Instagram and LinkedIn. An SPE that is subject to entity-level tax, such as a corporation or a partnership that is taxed as a corporation, will potentially incur tax liability for any gains resulting from the sale of financial assets and any income otherwise paid with respect to the financial assets in excess of deductible expenses. Apply today at CareerBuilder! In all matters, Shearman & Sterling is dedicated to serving clients at the highest level. Summer associate programs of Such information would be a very brief statement of the nature of the business of the issuer and the products and services it offers; and the issuers most recent balance sheet and profit and loss and retained earnings statements, and similar financial statements for such part of the two preceding fiscal years as the issuer has been in operation (the financial statements should be audited to the extent reasonably available).. Violations of the swaps rules promulgated by the CFTC will be subject to enforcement and penalties by the CFTC. Agency securitisations represent the biggest part of the securitisation market by far. Hogan Lovells has around 2500 attorneys and Shearman boasts about 850. failure to pay principal or interest due on specified classes of notes after applicable cure periods; the trustee failing to have a first-priority perfected security interest in all (or a material portion) of the collateral; the issuer becoming a covered fund under the Volcker Rule, required to register under the Investment Company Act, or subject to entity-level taxes and potentially other regulatory events; breach of representations or covenants that continue beyond applicable cure periods; and. Newbies in the seat were drawn to the opportunities in developing areas of renewable energy and green power on offer, with typical tasks including drafting contracts, document management, and proof-reading.. To avoid this outcome, foreign securitisation issuers tend to conduct their activities in accordance with detailed guidelines that are aimed at ensuring that they are not engaged in loan origination or otherwise treated as conducting a lending or other financial business in the USA. About 90% of the US securitisation market consists of mortgage-backed securities that were issued or guaranteed by Ginnie Mae, Fannie Mae and Freddie Mac, and are expressly exempt from registration pursuant to the relevant congressional act by which such entities were formed. Securitisation disclosure requirements are in part governed by generally applicable securities laws, and in part by some ABS-specific requirements. Shearman & Sterling represented the initial purchasers in connection with Jiayuan International Group Limiteds offering of $130 million 11% senior notes due 2024. The trustees tend to be large banking associations that satisfy relevant regulatory and ratings agency criteria such as requirements under the Trust Indenture Act (for registered ABS issuances) and as required by Investment Company Act Rule 3a-7, where the issuer relies on that exemption. SOFR compounded in advance, calculated by compounding interest over a set period of days. The exemptions most commonly used for securitisations are Rule 3a-7, Section 3(c)(5) and Section 3(c)(7). There was a lot of seeking out case law, and work on public deals meant we needed to keep our ears to the ground for developments in the market. Non-research tasks included standard due diligence and reviewing uploads into the data room. However, asset-level disclosures of the level of detail required in Reg AB II offerings are not commonly included in private placements. The old trope of competition at US firms was something that the current intake was quick to dismiss too. Typically, the power to exercise such rights and remedies is given to the trustee with provisions that entitle the trustee to obtain directions backed by indemnification. Phase 2 was scheduled to extend from 4 January 2023 through 4 January 2024, and Phase 3 was scheduled to begin on 5 January 2024 and extend indefinitely. The sponsor must file Form 15-G on EDGAR at the end of any quarter in which there has been a repurchase demand made under the transaction documents for breach of representations and warranties. Appointing an independent director whose fiduciary duty runs to the SPE and not to its shareholders, and employing an entity type that allows for such redirection of fiduciary duties, reduces the risk of a filing for the benefit of its shareholders. Shearman & Sterling represented the initial purchasers in connection with Shinsun Holdings (Group) Co., Ltd.s offering of $200 million 12% senior notes due 2023. One list of such factors is collected in the Tenth Circuit opinion of Fish v East, 114 F2d 117 (10th Cir 1940), as follows: A second commonly cited list of such factors appears in the case of in re Vecco Constr Indus 4 BR 407, 410 (Bankr ED Va 1980), as follows: An additional factor, articulated by the Fourth Circuit Court of Appeals in Stone v Eacho, 127 F2d 284, 288 (4th Cir 1942), has also been cited by a number of cases, namely whether by ignoring the separate corporate entity of the [subsidiaries] and consolidating the proceeding with those of the parent corporation all the creditors receive that equality of treatment which is the purpose of the bankruptcy act to afford.. Shearman & Sterling represented the initial purchasers in connection with Skyfame International Holdings Limiteds offering of $112 million 13% senior notes due 2023, unconditionally and irrevocably guaranteed by Skyfame Realty (Holdings) Limited. To the extent such securitisations are registered, they must comply with the Reg AB II requirements described in 4.1 Specific Disclosure Laws or Regulations, and otherwise the general disclosure requirements described in 4.2 General Disclosure Laws or Regulations apply. In a typical securitisation the investors will have a right to payment, and investors will also have certain rights to direct the trustee to take enforcement actions, and the controlling class of noteholders will thereafter have enhanced ability to direct the trustee in accordance with the terms of the transaction documents. However, as a practical matter, SPEs organised in the USA overwhelmingly tend to be organised as a limited liability company or a statutory trust. Reg AB II enables the SEC to extend the asset-level disclosure requirements to 144A private placements and to additional asset classes. Indenture trustees act on behalf of noteholders and typically also act as trustees for the collateral. Synthetic securitisations are permitted. Co-Global Managing Partners: George Casey, Adam Hakki Examples include domestic family law clinics, supporting children obtain refugee status and amnesty for death row inmates. "He is very proactive, approachable, easy to work with and technical.". Only JD 2025 law students are eligible to apply. Reg AB II introduced new ABS-specific registration statement forms, Forms SF-1 and SF-3, to reflect the additional disclosure requirements and shelf-eligibility requirements under Reg AB II. It is common to obtain a true sale opinion in securitisation transactions that evaluates the relevant facts in light of the factors outlined above. Graduate recruitment manager, Paul Gascoyne tells us the online form is pretty standard and contains three open-ended questions: 'Why do you want to be a solicitor?' 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