This analysis will typically focus on the entities that have the ability to direct the SPEs activities (and may also look at activities that took place prior to the relevant transaction). However, transactions that comply with Rule 144A and Regulation S permit qualified institutional buyers and foreign persons to freely sell to other qualified institutional buyers or other foreign persons. By establishing a wide base of technical knowledge, experience and understanding of each clients needs, we advise clients on their most critical tax matters, including reducing overall tax costs and developing tax-efficient investment and operating structures. As such, an awareness of the types of features that drive the consolidation analysis is often important in structuring the SPE and drafting the relevant transaction documents. Delaware has up-to-date business entity laws that provide for efficient and quick formation, a sophisticated judiciary and a significant volume of decisions that together provides additional certainty and acceptance. Those rules, which were proposed in July 2022 and adopted in December 2022, will become effective 30 days after their publication in the Federal Register. In a securitisation transaction it is common for tax counsel to provide an opinion addressing the tax treatment of the issued securities; in particular, whether the offered notes would be treated as debt securities for US federal income tax purposes. FATCA generally requires that: Foreign entities located in jurisdictions that have entered into intergovernmental agreements with the USA in connection with FATCA may be subject to special rules or requirements. If a credit event occurs under a CDS, then the SPE will fund its payment obligation with proceeds from the permitted investments. Overview. Issuers are typically SPEs that are restricted from engaging in activities unrelated to the securitisation. For example, Reg AB II specifies that the transaction documents cannot require more than 5% of the principal amount of notes to direct the trustee to exercise its remedies. In addition, a non-consolidation opinion is often required if the transfer is to an affiliated entity (ASC 860-10-55-18A), although the opinion may not be required if the accountants are comfortable that the appropriate legal opinion(s) would be given if requested (id at 55-18B). Our Head Start programme is a one-day event specifically designed for First Year law students and Second Year non-law students looking for an introduction to City law. The structure allows for multiple series of securities to be issued that all share in assets of the master trust. The opinion will usually identify these key factors and draw a conclusion based on the overall analysis and reasoning in the opinion letter. Shearman & Sterling represented the dealer managers in connection with the exchange offer by Guangzhou Fineland Real Estate Development Co., Ltd. of any and all of its outstanding 13.5% senior notes due 2021 for 13.6% senior notes due 2023. Preferred: Relevant work experience; law journal/moot court participation; foreign language skills. In sum, Rule 15c2-11 rule does not appear to pose problems for brokers or dealers desiring to quote registered public ABS, at least so long as they are currently reporting. In a recent matter, Shearman & Sterling advised NEOM Company on the cross-border financing of a $6.5 billion green energy facility between the UK and Saudi Arabia. Reg AB II enables the SEC to extend the asset-level disclosure requirements to 144A private placements and to additional asset classes. Trainees have shaped our success story and played a pivotal role in the firms growth. Any identified determining person will have the authority to replace the LIBOR rates with the SOFR-based benchmark replacement selected by the Federal Reserve. Under the CFPA, a covered person includes (A) any person that engages in offering or providing a consumer financial product or service; and (B) any affiliate of a such a person, if such affiliate acts as a service provider to such person. Vac schemers undertake the assessments outlined above written and group exercises, a case study assessment, plus a partner interview during the second week of their placement. All the resources you need to research law firms and barristers' chambers, Banking & Finance: Borrowers: Big-Ticket (Band 2), Banking & Finance: Lenders: Big-Ticket (Band 3), Capital Markets: High-Yield Products (Band 3), Corporate/M&A: 100-800 million (Band 3), Energy & Natural Resources: Oil & Gas (Band 3), Energy & Natural Resources: Power (Band 2), Financial Services: Non-contentious Regulatory (Band 3). vertical risk retention by holding of at least 5% of each class of ABS interests issued; horizontal risk retention by holding junior most interests in an amount equal to at least 5% of the fair value of all ABS interests issued; and. Co-Global Managing Partners: George Casey, Adam Hakki Shearman & Sterling LLP Website www.shearman.com Share profile Contact details Contact number +1 202 508 8000 Related Rankings About Chambers Review Work Highlights Notable This takes place with either a senior associate or a partner and a member of the graduate recruitment team, and isn't too formal, according to Gascoyne. Re-securitisations are subject to separate risk weight calculations. 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. As a result, the ruling, if upheld on appeal, would allow the CFPB to proceed with an enforcement action directly against the Trusts for liability for actions undertaken by the Trusts servicers (on behalf of the Trusts) and not by the Trusts themselves. Therefore, the only variations of SOFR actually available to use until July 2021 were: In March 2021, the ARRC published a white paper containing an approach to using SOFR in new issuances of ABS and other securitised products. 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. However, the recent October amendments to the Volcker Rule allow for a small bond basket, thereby removing one of the restrictions that have prevented CLO managers from engaging in a bond/loan arbitrage that was popular prior to the promulgation of the Volcker Rule. determining benchmark replacement conforming changes, for contracts other than consumer loans. Registered investment companies are subject to leverage and capital structure requirements that are incompatible with a securitisation. the relevant laws relating to the relevant form of organisation in its jurisdiction of formation; bankruptcy or other applicable insolvency laws. public statement by LIBORs administrator, ICE Benchmark Administration Limited (IBA), or its UK regulator, the UK Financial Conduct Authority, that the actual cessation of LIBOR has occurred or is expected; a public statement or publication of information by the IBA that LIBOR is no longer representative as an index (known as a pre-cessation trigger); or. for Federal Family Education Loan Program (FFELP) loan ABS, either 30-day average SOFR (for one-, six-, and twelve-month LIBOR) or 90-day average compounded SOFR (for three-month LIBOR). Delaware is viewed as a favourable jurisdiction for forming business entities. representations that the secured party has a perfected security interest. The firm now recruits exclusively through its vacation scheme. Insurance companies capital rules are typically more closely tied to ratings. Under Rule 15c2-11 the broker or dealer must review a number of items of specific information, which are required to be current and publicly available, before quoting a security. Vinson & Elkins awards some of the brightest law students from top law schools in the U.S. with Diversity Fellowships each year. At Shearman & Sterling, being a full service law firm means that we are able to offer a full range of legal services to our clients. This other question of the Trusts vicarious liability for the servicers conduct remains a critical open point and is likely subject to further years of litigation before it is decided or may not be decided at all if the case is settled. In the early 1970s, long before Raheem Sterling was on the scene, another famous Sterling pulled on an England shirt. News October 20, 2022 Shearman & Sterling Earns High Rankings in Chambers UK 2023 Shearman & Sterling continues to garner recognition in the 2023 edition of Summer Associates are paid an Entry-Level Associate Salary of $215,000, prorated for dates of employment. Osaka Gas USAs Joint Development of Utility-Scale Solar Projects with Oriden in the US. The group is split into three sub-teams in investment-grade finance, leveraged finance, and structured finance. Shearman & Sterlings Litigation Group is strongly positioned to counsel and protect clients in todays challenging environment. The credit from the master trust is revolving in the sense that as the dealer inventory is sold or the credit card customer repays their balance, as applicable, funds are paid to the master trust. For example, a single-member limited liability company (LLC) is, for federal tax purposes, disregarded (in the absence of the SPE electing any contrary tax treatment) and therefore any transfer of assets from a parent to its wholly owned LLC will not be a taxable event. Enforcement is usually a combination of events of default under the indenture, which gives the noteholders the right to direct the indenture trustee to take enforcement actions, and servicer defaults, which give the specified class or classes of noteholders rights to replace the servicer. Title VII of the DoddFrank Act establishes a comprehensive regulatory framework for OTC derivatives to address a number of aspects of OTC derivatives that were identified as causing vulnerabilities in the financial system; in particular, the complexity, lack of transparency and interconnectivity of the OTC market and the lack of consistent margin requirements. The information must be published at least three days prior to bringing a covered securitisation to market. Follow Shearman & Sterling on Instagram and LinkedIn. The agreement will also often contain provisions that define the servicing standard and further address the relevant role and any additional obligations of the servicer. Ltd. on its acquisition of Korchina Logistics Holdings Limited. Lifting the stay may be time-consuming and costly, and subject to the broad statutory and equitable powers of the bankruptcy court. 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.. As one trainee put it, the seat is a good one if you enjoy black letter law. Shearman & Sterlings regional expertise extends from North and South America to the Middle East, Asia, Africa and Europe. Substantive consolidation is an equitable doctrine that permits a bankruptcy court to disregard the separateness of an entity that itself is not otherwise in bankruptcy and that provides an alternative pathway for an SPE to become entangled in its affiliates bankruptcy proceedings. Other important factors include market practice and acceptance. Until recently, Rule 15c2-11 has always been understood by market participants to apply only to equity securities. Reg AB II deviates from the typical shelf registration practice of using a base prospectus and a supplemental prospectus, and instead requires the filing of one integrated prospectus. Consequently, in order to be attractive to banks, securitisation entities tended to avoid becoming a covered fund under the Volcker Rule. If a debtor becomes subject to bankruptcy proceedings, creditors will, with some exceptions, be automatically stayed from collecting and enforcing against the debtor and any posted collateral. The team is split between project development work, and the project finance side of things, one trainee explained. Penalties for violating the rules can include suspension or revocation of an NRSROs registration if the SEC makes a finding under certain specified sections of the Exchange Act that the NRSRO violated the conflicts-of-interest rule and the violation affected a credit rating. Because there are differences between CLOs and other private funds, the potential application of certain aspects of the proposed rules to existing and future CLO transactions remains unclear. The exemptions most commonly used for securitisations are Rule 3a-7, Section 3(c)(5) and Section 3(c)(7). Shearman & Sterling's compensation is merit-based. The issuer will receive cash flows from the permitted investments and the CDS protection premiums. The sale of loans and other receivables can also trigger certain gains or losses, generally depending on whether the SPE is part of the same tax-consolidated group as the transferor, and may, depending on applicable law and the characterisation of the transfer, also have consequences for the transferors continued ability to deduct losses from bad loans. 5. Shearman & Sterling represented Guotai Junan Securities (Hong Kong) Limited and China Galaxy International Securities (Hong Kong) Co., Ltd. as the initial purchasers in connection with DaFa Properties Group Limiteds offering of $100 million 9.95% senior notes due 2022. In private deals, the investor vote required for certain actions is primarily a negotiated point, although in registered securitisations these requirements are more prescribed. The rules governing such entities will be a combination of: The primary factors driving the type and jurisdiction of the securitisation entity will be bankruptcy remoteness and tax. 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