Double Dose: LSTA's Ganz on SEC Funds Regs, Schwartz on Real Estate Trends
Sep 19, 2023
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Elliot Ganz from LSTA discusses the fight against SEC regulations and leveraged loans. Belinda Schwartz talks about trends in distressed real estate. Topics include ruling on syndicated loans, regulatory challenges, SEC fund rules impact, and commercial real estate bankruptcy trends.
Court rulings clarify syndicated loans not as securities, providing market safety.
Potential reevaluation of securities status if market changes significantly occur.
Focus on market structure issues like uneven recoveries and questionable strategies for stability.
Deep dives
Court Decisions on Note Issuance under Syndicated Leverage Loan
Recent court decisions clarified that syndicated loans are not considered securities, providing a safe harbor for the market. The rulings affirm that term loans, like the Millennium loan, do not fall under securities laws. This decision sets clear boundaries for market participants, reducing the likelihood of securities-related issues in the future.
Potential Reevaluation of Court Decision on Loans as Securities
Despite the current clarity on loans not being securities, a potential reevaluation may occur if significant market changes transpire. Factors like syndicate size and investor types could prompt a revisit to the ruling. However, as long as the market remains stable, the ruling serves as a solid foundation for the loan market's legal framework.
Concerns Over Uneven Recoveries and Market Strategies
Beyond the securities debate, the concern shifts to the market's structure and practices, particularly focusing on uneven recoveries and questionable market strategies. Highlighting issues like bifurcated recoveries and the impact on rating agencies, market participants aim to address structural challenges for a more stable and equitable market.
SEC Regulations Impacting Private Fund Advisors
The podcast delves into the recent SEC regulations affecting private fund advisors, especially regarding additional disclosures and business practices. The rule aims to enhance investor protection but faces criticism for its application to diversified funds like CLOs. Questions arise about the extent of SEC's regulatory authority and the potential impact on the private funds market.
Shifting Trends in Distress Real Estate Market
Discussions with Belinda Schwartz highlight emerging trends in the distress real estate sector, such as an uptick in single-asset bankruptcy filings and challenges in various real estate segments. Factors like interest rate shifts and market constraints influence restructuring and debt strategies, leading to increased demand for advisory services amidst evolving market conditions.
This week we’ve got a double-dose of our primary view interview segment.
First, Elliot Ganz Head of Advocacy at the Loan Syndications and Trading Association joins Deputy Managing Editor at Reorg, Kevin Eckhardt, to discuss the private funds industries recent petition to the the Fifth Circuit to invalidate the SEC’s recently adopted regulations of private fund advisers the Second Circuit’s recent opinion affirming a May 2020 district court decision holding that notes issued under a $1.798 billion syndicated leveraged loan to Millennium Health do not qualify as “securities”.
Also, Reorg’s Patrick Fitzgerald speaks with Belinda Schwartz, executive chair and the head of Herrick Feinstein’s Real estate department, about current happenings in distressed real estate, including the surprising uptick in single asset real estate cases, unusual developments in the high-end residential markets, the confluence of circumstances that are driving changes in the market and what lies ahead.
And, as always, we bring you our weekly summary of interesting developments in the restructuring world as well as a preview of what’s on the docket for next week.
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#leveragedfinance #highyield #restructuring #performingcredit #distresseddebt #debtrestructuring #leveragedloans
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