In 2024, we alerted you to a decision out of the First Appellate District of Ohio (The Huntington National Bank v. Schneider, C-230072 (December 29, 2023)), where the Court was asked to review a grant of summary judgment in...more
In subscription finance transactions where the borrower or another pledgor entity (such as a feeder fund or guarantor) is a Delaware limited partnership or a Cayman Islands exempted limited partnership (ELP), the role of the...more
New and significant prohibitions against financial transactions between U.S. financial institutions and three Mexican financial institutions are set to go into effect in a little over a month on September 4, 2025. In late...more
INTRODUCTION - Over the past 50 years, the retirement landscape has steadily shifted from defined benefit (DB) pension plans to defined contribution (DC) plans. In fact, as of the fourth quarter of 2024, private sector DC...more
Many subscription credit facilities will provide for the issuance of letters of credit in addition to the funding of loans. A letter of credit is an irrevocable undertaking for the payment of money issued by a bank at the...more
Cascading pledges are frequently used in subscription finance to avoid legal impediments, avoid tax implications and mitigate prohibited transaction risk under the Employee Retirement Income Security Act of 1974, as amended...more
In the past few years we have seen a resurgence of the use of portable alpha strategies tied to hedge fund investments (and the financing arrangements that accompany them), a trend that this old-timer last encountered more...more
As Net Asset Value (“NAV”) credit facilities continue to grow in popularity, we have seen a steady increase in non-traditional borrowers utilizing NAV loans, including family office borrowers. The term “family office” is used...more
Subscription credit facilities, commonly referred to as “sub-lines” or “capital call facilities,” are a cornerstone of private equity finance. These facilities are secured by a bespoke collateral package that protects lenders...more
With four major interest rate benchmarks ceasing to be published by the end of last year, we thought now would be a good time to provide a refresher on alternative currency rates. In this article we first discuss the key...more
In the evolving fund finance market, lenders are constantly assessing ways to mitigate risk and enhance credit support in order to provide for the smooth operation of subscription-based credit facilities. One such credit...more
EXECUTIVE SUMMARY - Subscription credit facilities rely on the obligations of investors to a private investment fund (“Fund”) to contribute their capital commitments to the Fund when called. From a subscription credit...more
Subscription credit facilities are a widely utilized product in the fund finance market, offering sponsors access to a reliable source of financing to bridge capital call and to lenders collateral backed by investors’ capital...more
The recent closing by Goldman Sachs of its highly innovative and market leading US$475 million “capital call” securitisation of subscription credit lines has generated a lot of interest in both fund finance and structured...more
EXECUTIVE SUMMARY - As part of its Climate Accountability Package, California passed a law last year that creates disclosure requirements related to greenhouse gas (“GHG”) emissions for thousands of U.S. companies,...more
The credit agreement for a subscription credit facility will list several conditions precedent that are required prior to the credit agreement becoming effective and/or the first extension of credit occurring thereunder....more
EXECUTIVE SUMMARY - Net Asset Value ("NAV") credit facilities are lending arrangements underwritten on the borrower’s portfolio of investments, where the amount available for borrowing is based on the value of such...more
The key component of any subscription credit facility is the underlying capital commitments that are pledged to secure the facility. Virtually every lender will require some level of over-collateralization – meaning, investor...more
Executive Summary - Net Asset Value (“NAV”) credit facilities are a tool that borrowers may use to access financing based on the value of their underlying investment portfolio. The users of these facilities are generally...more
We have said it before – the “credit cornerstone” of a subscription credit facility is the limited partnership agreement (the “LPA”) – it is the primary contract, together with any side letters, governing the relationship...more
EXECUTIVE SUMMARY - Private equity structures often use “blockers” to achieve certain tax benefits. In this Legal Update, we explain what blockers are, how they may be used in a subscription credit facility, and what...more
Section 23A and Super 23A can create additional complications for lenders in the fund finance market. Intended to protect the stability of financial institutions by restricting transactions with affiliates, Section 23A and...more
EXECUTIVE SUMMARY - In the evolving landscape of the subscription credit facility market, the introduction of fraud allegations by an investor against a fund as a new exclusion event marks a pivotal shift....more
Fund-level subscription-secured revolving lines of credit are a well-established instrument in the toolkits of a variety of private equity fund sponsors and managers, including for venture capital funds, hedge funds, debt...more
Because banks receive favorable capital treatment when a credit facility’s tenor is shorter than one year, lenders increasingly offer financing with 364-day tenors and uncommitted extension option terms of up to 364 days. In...more