Synthetic USD LIBOR
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Aaron Levy, Kevin Ryan and Michael O'Brien
1M ago
As market participants prepare to submit comments on the recent proposal of the UK’s Financial Conduct Authority (the “FCA”) (available here) to require the temporary publication of a “synthetic” 1-, 3- and 6-month USD LIBOR, some have voiced concern that such a compelled publication of a synthetic USD LIBOR could precipitate a wave of litigation over whether certain U.S. law-governed contracts will be able to fall back to contractually agreed alternative rates in June 2023. Although the Federal Reserve Board’s recent regulations implementing the LIBOR Act (available here) (the “FRB regulation ..read more
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More Trouble Ahead for the Mortgage Industry If Ginnie Mae’s Risk-Based Capital Requirements Take Effect
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Colleen McDonald
1M ago
The new Ginnie Mae issuer financial requirements, first published on August 17, 2022 in APM 22-09 by joint announcement with the Federal Housing Finance Agency[1], are scheduled to take effect in two parts beginning September 30, 2023*. See All Participant Memorandum (APM) (ginniemae.gov) and All Participant Memorandum (APM) (ginniemae.gov). Critics of the new financial requirements say they are badly flawed and ill-advised. 1. Revised Net Worth Requirements Effective September 30, 2023, the minimum Net Worth requirement for all institutions seeking approval as Ginnie Mae single-family Is ..read more
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CFTC Amends Clearing Requirements
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Aaron Levy
5M ago
On August 12, 2022, the CFTC issued a final rule modifying its clearing requirement for interest rate swaps (“IRS”). The final rule updates the types of IRS required to be submitted to a registered derivatives clearing organization (“DCO”) for mandatory clearing by: eliminating the requirements to clear IRS referencing LIBOR and certain other interbank offered rates (“IBORs”); and introducing, in their place, new requirements to clear IRS referencing the relevant replacement risk-free rates, such as the Secured Overnight Financing Rate (“SOFR”) in the case of USD LIBOR. CFTC Chairman Rostin ..read more
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California Approves Commercial Financing Disclosure Regulations
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Moorari Shah and A.J. Dhaliwal
8M ago
On June 9, the California Office of Administrative Law (OAL) approved the Department of Financial Protection and Innovation’s (DFPI) proposed commercial financing disclosure regulations issued pursuant to SB 1235. The regulations will become effective on December 9, 2022, and the final regulatory text can be found here.  Putting it Into Practice: Impacted companies offering should note that the final regulations do not provide a model disclosure form but provide fairly prescriptive rules regarding the content and format of the required disclosures. While similar regulations in New York ar ..read more
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FTC Captures $2.7 Million in Restitution from Small Business Financer
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Moorari Shah, A.J. Dhaliwal and Katie Daw
8M ago
On June 2, the FTC was granted a federal court order permanently barring a merchant cash advance operation and its owner from engaging in further deceptive practices and granting restitution to the customers the company harmed. The defendants offered alternative small business financing by purportedly providing funds to businesses in exchange for a percentage of future revenue. According to the FTC, however, the defendants frequently deceived small businesses and their owners, lying about terms and fees for their financing. The websites falsely claimed that cash advanced required no ..read more
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The Role of the Independent Director in a Restructuring
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Justin Bernbrock and Bryan Uelk
11M ago
The practice of appointing one or more independent directors to the boards of distressed companies has not only proliferated in recent years, but has become the subject of increasing controversy. In this episode of the Restructure THIS! podcast, John Dubel discusses, among other things, the proper role of an independent director in a restructuring and weighs in on whether he believes the current independent director framework in chapter 11 is broken. In doing so, John addresses some of the most significant criticisms that have been levied against independent directors, including that independe ..read more
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Communicating Distress in the Digital Era
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Justin Bernbrock and Catherine Jun
11M ago
During times of corporate uncertainty, the company’s message to customers, vendors and employees can either instill confidence or foster anxiety. This holds true more than ever in the digital and social media era. In a chapter 11 scenario, then, engaging with, rather than dodging, press calls may be preferred approach.  This provides the opportunity to craft the message as well as address misinformation from leaks. For more on this topic, listen to the Restructure THIS! Podcast Episode 6 hosted by Sheppard Mullin partner Justin Bernbrock, who interviews Sydney Isaacs and Dan Scorpio of th ..read more
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Sheppard Mullin and M3 Partners Weigh In on the Potential Drivers of the Next Restructuring Cycle for the ABI Journal
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Justin Bernbrock, Bryan Uelk, Catherine Jun and Robert McLellarn
1y ago
Members of Sheppard Mullin’s Finance & Bankruptcy team recently co-authored an article entitled “When the Other Shoe Drops: Drivers of the Next Restructuring Cycle” with experts from leading restructuring advisory firm M3 Partners for the January 2022 issue of the American Bankruptcy Institute Journal. The article discusses the confluence of factors that Sheppard Mullin and M3 believe will contribute to an uptick in restructuring activity in the future, including the eventual tightening of credit markets and a variety of pre-pandemic and post-pandemic headwinds. “Despite the broad V-shaped ..read more
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Security-Based Swap Rules for End-Users
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Aaron Levy and Michael O'Brien
1y ago
As of November 1, 2021, dealers in security-based swaps (“SBS”) whose dealing activity exceeds certain de minimis thresholds (e.g., gross notional amount of $3 billion for credit default SBS, $150 million for other SBS, and $25 million for SBS where the counterparty is a special entity) are required to register with the SEC as a security-based swap dealer  (“SBSD”) and to comply with the SEC’s regulations applicable to SBS.[1]  Many dealers exceeded these thresholds and filed for registration on or prior to November 1.  Other dealers who exceed these thresholds later will b ..read more
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NIGC Issues New Guidance on Financing Document Reviews and Declination Letters
Sheppard Mullin | Finance & Bankruptcy Law Blog
by Christine Swanick and Wilda Wahpepah
1y ago
The National Indian Gaming Commission (“NIGC”) issued guidance this week for tribes and tribal lenders who submit loan documents to the NIGC for a so-called “declination letter.”  Bulletin No. 2021-4, “Submission of Loan Documents and Financing Documents for Review,” summarizes criteria the agency has developed in the last decade for determining whether loan documents constitute “management” contracts, which under federal law must be approved by the NIGC Chairman or they are void.  The Bulletin states that while the Office of General Counsel will continue to review loan documents and ..read more
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