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Business & Finance
Distressed Debt & Claims Trading
When not managed properly, trade and transfer risk issues can push a potentially winning investment into losing territory. Schulte’s Distressed Debt & Claims Trading Group has extensive experience advising broker-dealers, hedge funds, investment banks, CLOs and private equity funds on a wide range of U.S., European, Asia-Pacific and emerging markets debt and claims trading matters. Our lawyers understand our clients’ goals and have the transaction skills and commercial sense required to facilitate execution and settlement of trades.
The Group advises clients in structuring, preparing and negotiating deal-specific transaction documentation, including trade confirmations, debt and post-reorganization equity purchase and sale agreements, claim assignment agreements, participation agreements, proceeds letters, confidentiality agreements, “big boy” letters and bid procedure documentation.
The Distressed Debt & Claims Trading Group’s lawyers often play a central role in transactions having a trading component while working closely with lawyers from the firm’s other practice groups, including the Distressed Investing, Finance, Investment Management, Business Reorganization, Structured Finance & Derivatives, Litigation, Regulatory & Compliance and Tax Groups.
Auctions, Bulk Transfers, and Rights Offerings
Bank Debt Auctions
For clients participating as buyers or sellers in auctions for bank debt portfolios, we prepare bid documentation, collect bids, evaluate bids, and guide you through the complete bidding and settlement process. When acting for buyers, we analyze and advise on issues relating to the underlying claim documentation and negotiate claims transfer documentation.
Bulk Transfers and Portfolio Analysis
We advise our clients as both buyers and sellers in bulk transfers of claim and debt portfolios, and we provide a full analysis of the underlying claims recovery, credit review, and transfer issues.
The Group advises clients as participants or backstop parties of debt and equity rights offerings in connection with a debtor’s plan of reorganization. When our clients are the beneficial holder of the debt or equity — and not the record holder — our lawyers ensure that their right to participate is thoroughly documented and protected. We understand how crucial it can be to receive proceeds as soon as possible; accordingly, we ensure that the transfers of any proceeds after a successful rights offering are settled as quickly and comprehensively as possible.
Bank Debt Trading
We regularly advise buy-side and sell-side clients at each stage of a debt or claims transaction. In addition to highlighting the risks associated with any given trade and formulating the optimal settlement or structuring options, we represent clients in the negotiation of trade confirmations, purchase and sale agreements, participation agreements, proceeds letters, and “big boy” letters.
The lawyers in the Distressed Debt & Claims Trading Group are active members of the Loan Syndications and Trading Association (LSTA), Loan Market Association (LMA), and Asia Pacific Loan Market Association (APLMA); as a result, they have long-standing familiarity with the protocols and recommended documentation advocated by each association. We have a comprehensive understanding of the U.S., European, Asian-Pacific, and emerging secondary loan markets, and we regularly facilitate loan transfers worldwide.
Bankruptcy Claims Trading
We advise buyers and sellers on all aspects of bankruptcy claim trading transactions, ranging from bilateral transfers to complex multi-party claims auctions. The Group’s lawyers structure, prepare, and negotiate the transaction documents, review and analyze the underlying proofs of claim and supporting documentation, and file any transfer notices. We address the various risk silos that can influence claims trades — including notional, recovery, and counterparty risk — to meet your needs. Additionally, we guide you through every step of the negotiation process.
Club Syndications of Claims
We regularly advise clients in structuring and participating in club syndication deals and joint-venture claim participations. We negotiate and structure each transaction step to address recovery, notional amount, counterparty credit risk, voting, control, and information rights.
We design structures that enable our clients to leverage their bankruptcy claims positions. In conjunction with Schulte’s Finance Group and Structured Finance & Derivatives Group, we advise on leverage opportunities where the clients’ claims serve as collateral for a loan or structured product.
Claims Trade Auctions
For sellers, we prepare bid documentation, collect bids, assist in evaluating bids, and provide guidance through every stage of the bidding and settlement process. When acting for buyers, we analyze and advise on issues relating to the underlying claim documentation and negotiate claims transfer documentation.
Schulte regularly provides regulatory and compliance advice on the interaction between LSTA and LMA guidelines and U.S. and European securities laws. The Distressed Debt & Claims Trading Group stays up to date with regulatory legislation that is in effect or in development, and continually monitors the position of bank debt and claims as an asset class. Our lawyers routinely advise clients on trading in different levels of a company’s capital structure, the relationship between a company’s equity and bank debt, and their position when trading on the basis of syndicate confidential information and borrower confidential information.
Post-Reorganization Equity Trading
Many compliance and logistical considerations can affect the liquidity and settlement of securities when a company issues new equity under a Chapter 11 plan, an English law scheme of arrangement, or another form of restructuring. The new equity holders, the reorganized company, and transfer agents will often be unaccustomed to settling post-reorganization equity trades and unfamiliar with the governing terms of the new equity instruments or the provisions in the underlying stockholders’ agreement.
We understand the unique issues facing the various parties in settlement of post-reorganization equity transactions and work with them and their respective advisers to establish consensus on all necessary transfer documents and steps, including, if required, any securities law opinions.
Schulte Roth & Zabel (SRZ) is hosting its 27th Annual Private Investment Funds Seminar today in New York. A pioneer in the alternative investment management industry, SRZ has advised private funds for nearly 50 years. Today’s seminar...
On 13 June 2017, the Loan Market Association (the ‘LMA’) released updated Standard Terms and Conditions for Par and Distressed Trade Transactions (Bank Debt/Claims) (‘T&Cs’), that will apply to transactions with a trade...
The Loan Syndications and Trading Association (“LSTA”) published revised secondary trading documents on June 9, 2017. The revised documents will apply to trades with a trade date on or after June 9, 2017. The most significant changes that...
We have extensive, broad-based experience and pride ourselves on our accessibility to our clients and our responsiveness to their needs. Having participated in all litigation and transactional aspects of in-court and out-of-court restructurings, we...
Given the complexity and size of recent financing transactions that are now in or near distress, structuring or restructuring the deal may also require collaboration by our clients with one or more other parties who have aligned interests in order to...
Our clients benefit from our premier practice in investment management, allowing us to provide unparalleled advice to energy-focused asset managers. Our lawyers are leaders in the industry and we have a substantial and well-regarded private equity...
We work with a diverse client base, including investment managers, hedge funds, ERISA plans, ’40 Act funds, UCITS, SICAV funds and financial institutions. Our lawyers are well-versed in all types of derivatives agreements — including those which are...