Shearman & Sterling advised the lenders, comprising Sumitomo Mitsui Banking Corporation, ING Bank NV, DBS Bank Ltd, Bank of China Limited, Mizuho Bank Limited and Socit Gnrale, on the refinancing of the 220 MW Bhola Combined Cycle Gas Turbine project in Bangladesh. 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. Shearman & Sterling LLP has a very efficient, reactive and knowledgeable team that is good fun to work with . Chambers and Partners guides offer in-depth analysis of the legal market within countries and regions across the globe. Applicable tax laws may also cause debt instruments to be characterised as equity interests for purposes of that determination. Instead of selling the assets and leases to be securitised to a particular issuer, the titling trust segregates such leases and assets, and issues special units of beneficial interests (SUBIs) that represent the interest in such segregated pool. Exchange Act Rule 17g-5 divides conflicts of interest into two categories: As part of the conflict rules in 17g-5, an NRSRO is required to obtain a representation from the issuer, sponsor or underwriter of an asset-backed security that it will post on a real-time basis information any of them provides to any hired NRSRO in connection with the initial credit rating or subsequent credit surveillance to a password-protected website. Limiting the SPEs unrelated activities and restricting the SPE from having employees and unrelated property reduces the risk of unrelated liabilities. Shearman & Sterling represented J.P. Morgan, Deutsche Bank, HSBC and UBS as the joint lead managers in connection with eHi Car Services Limiteds offering of $300 million 7% senior notes due 2026. Insurance companies capital requirements are subject to state regulation. The proposed disclosures do not appear particularly relevant to ABS issuers and would be problematic if made applicable to ABS issuers in their current form. 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.. Any person (including a determining person or calculating person) is protected from liability for: selecting or using a SOFR-based benchmark replacement selected by the Federal Reserve; implementing benchmark replacement conforming changes; or. While that analysis is not a legal analysis per se, it will involve a review of the various contractual rights existing in the transaction documents. Therefore, the New York statute is now only relevant to contracts that reference the omitted one-week or two-month LIBOR tenors. Agency securities and private placements are not subject to ABS-specific disclosure requirements other than the disclosure requirements relating to risk retention, repurchase requests, the third-party due diligence disclosure and rating agency communication requirements. the safe harbour provisions of 12 CFR 360.6 relating to transfer of assets in connection with a securitisation, which are discussed in, the Basel III capital requirements discussed in. Therefore, quotations of Rule 144A ABS generally are allowed without further inquiry by the broker-dealer. Shearman & Sterling is one of the worlds leading premier global law firms and was established over a century ago. As such, it is typical to obtain an opinion of counsel relating to the treatment of the notes issued by the SPE as debt for tax purposes and, depending on the activities of the SPE and the level of comfort provided under such opinions, to include additional transfer restrictions on instruments that are, or could be, equity for tax purposes so as to avoid the SPE becoming taxed as a corporation. For example, the Basel III capital rules penalise banks that invest below the most senior position in a securitisation, thereby impacting banks willingness to invest in mezzanine tranches and below. The letter does not directly address privately offered securities that do not rely on Rule 144A, such as a pure private/Section 4(a)2) deal or an institutional accredited investor/Regulation S only deal. Whether this option covers registered ABS that are subject to Exchange Act reporting requirements but where those requirements were suspended before ABS issuers had to file for the life of the deal poses an interpretive question. 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?' The NAIC has its own credit rating scale that largely ties to ratings from NRSROs, except for an alternative methodology applied to non-agency RMBSs and CMBSs. 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. There are also some client secondments available in the financial space, covering investment banks and companies like ICE (Intercontinental Exchange). The New York Fed publishes daily SOFR and 30-, 90-, and 180-day SOFR averages, which are compounded daily on each business day. If the transfer of an asset is respected as a sale, then such asset will cease to belong to the seller and therefore the buyers rights in such assets will typically not be affected by a subsequent bankruptcy of the seller. In May 2022, the National Association of Insurance Commissioners (NAIC) issued a letter recommending adjustments to the risk-based capital (RBC) treatment of CLO investments held by insurance companies, in order to eliminate a perceived arbitrage opportunity. The nature of the CDS may also impact the Investment Company Act analysis for the issuer. Many of these issues are addressed as part of the structuring of the SPE. 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 London office opened 50 years ago and quickly became one of the The Trusts hold more than 800,000 private education student loans totalling approximately USD12 billion, all of which were originated by private banks prior to 2008. The NAIC also recommended the addition of two new RBC factors of 75% and 100%, in order to account for the tail risk in any structured finance tranche. A guide to legal practice areas. For a sale of financial assets to be valid and enforceable against third parties, it has to attach and be perfected similar to what applies to a security interest in collateral. The sponsor is responsible for compliance with risk retention and other relevant regulatory requirements. It is common to obtain a true sale opinion in securitisation transactions that evaluates the relevant facts in light of the factors outlined above. 9 Appold Street, Broadgate West, London, Greater London, UK, EC2A 2AP, 300 West 6th Street, Suite 2250, Austin, Texas, USA, 78701, 2828 North Harwood Street, 18th Floor, Dallas, Texas, USA, 75201, Bank of America Tower, 800 Capitol Street, Suite 2200, Houston, Texas, Houston, Texas, USA, 77002, 1460 El Camino Real, 2nd Floor, Menlo Park, California, USA, CA 94025-4110, 535 Mission Street, 25th Floor, 94105, San Francisco, California, USA, 401 9th Street, NW, Washington, DC, District of Columbia, USA, DC, 20004-2128, Authored by Michael Dorf, Cody Wright, Robert J Cardone, Cassandra Cuellar, Authored by Lorna Xin Chen, Anil Motwani, Ji Zhang, Litigation: White-Collar Crime & Government Investigations, California: San Francisco, Silicon Valley & Surro, Litigation: General Commercial: Highly Regarded, 599 Lexington Avenue, New York, New York, USA, NY 10022-6069. In response to feedback from industry groups, the SEC issued a no-action letter in December 2021, which established a tiered set of compliance dates in an effort to allow brokers and dealers time to bring themselves into compliance. Forget Sterling Silver Shearman is going for gold! Law. Tax Laws and Issues. However, the SEC has to date not done so, and the Treasury has recommended against such expansion. For the firms full list of rankings, visit Chambers and Partners. 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. Nevertheless, since filing a UCC financing statement is easy and cheap, and would provide perfection regardless of whether the transfer is respected as a sale or whether it is characterised as a loan, such filing is typically the primary means of perfection. 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. In addition, for some securitisations, there will often be certain obligations around the delivery of reports and other relevant information to a back-up servicer. As you might expect from the third of the firms core focus areas, finance is a likely destination for trainees at Shearman & Sterling. Shearman & Sterling is one of the worlds leading premier global law firms and was established over a century ago. 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