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Structured Finance & Derivatives

Kaye Scholer’s nationally ranked, top tier Structured Finance & Derivatives Practice brings together a team of finance lawyers from our New York, Chicago, London and Frankfurt offices, with extensive experience, not only in structured products and asset securitization transactions, but also in the related fields of bankruptcy, tax, securities, real estate, financial institutions regulation and certain specialized industries. Our team has represented financial institutions in many of the largest and most complicated restructurings, portfolio sales and liquidations and government assistance transactions, including restructuring/liquidating Structured Investment Vehicles with more than $100 billion in outstanding securities, and representing UBS on a global basis in its $60 billion bailout from the Swiss National Bank (including restructuring/novating more than $16 billion in derivatives).

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Capabilities: How We Do It

We regularly represent leading global financial institutions, hedge funds, private equity funds, pension funds and insurance companies in a broad range of areas, including public and private ABS, RMBS and residential mortgage warehousing, CMBS, operating asset securitization (aircraft and rail), CLOs and corporate structured credit, commercial paper conduits, esoteric asset securitization, trade receivables securitization, structured asset funds, distressed asset sales, whole business securitization, warehouse facilities and derivatives. Our lawyers advise in all aspects of securitization, including structuring, negotiating and documenting transactions, forming multi-seller conduits and special purpose vehicles, obtaining ratings, representing providers of liquidity and credit enhancement, and representing issuers, trustees, underwriters and investors. Key areas of focus include:

  • Term Securitizations: Our lawyers have represented major issuers, underwriters, senior and subordinate investors, servicers, trustees, lenders and credit enhancement providers in a wide range of term securitizations, including public offerings as well as Rule 144A and other private placement transactions. Our work has included, among other things, the drafting of prospectuses and private placement memoranda, and the drafting and negotiation of pooling and servicing agreements, trust agreements and indentures, underwriting and placement agency agreements, and derivatives including credit default and interest rate swaps and ancillary documents. These securitizations have involved commercial and residential mortgage loans, farm credit loans, credit card receivables, leveraged leases, aircraft leases, railcar leases, healthcare receivables, auto loans and other asset types.
     
  • Commercial Paper Programs: Our group represents sponsors of numerous commercial paper conduits on a regular basis, and is considered a leader in the asset-backed commercial paper field. Sponsors represented by the group include US, as well as major Dutch, French, German, Swiss and Japanese banks. The group has created and restructured numerous commercial paper programs, including both asset-backed and loan-backed multi-seller conduits. The group has structured and documented a wide variety of asset types for commercial paper programs, including trade receivables, credit card receivables, equipment loans and leases, auto loans and leases, dealer floorplan receivables, synthetic leases (including equipment, aircraft and real estate construction facilities), utility receivables, franchisee loans, healthcare receivables, partner capital loans, timeshare receivables, residential and commercial mortgages (warehouse lines), manufactured housing loans, commercial loans and SBA loans. Transactions handled by the group frequently involve derivative products and other complicated ancillary arrangements, such as interest rate and currency swaps, credit insurance and intercreditor arrangements.
     
  • Commercial Real Estate Securitization: We represent clients in a wide array of securitizations and other finance transactions relating to multi-family and commercial mortgage loans and mezzanine loans. Our lawyers have extensive experience in the representation of issuers, underwriters, originators, loan sellers, finance providers and investors in connection with fixed and floating, public and private commercial mortgage securitization transactions, in addition to loan syndications, participations, warehouse lending, repurchase financing, securities lending, loan servicing and asset transfers. We have also worked extensively on the structuring and negotiation of co-lender, intercreditor, participation and other syndication arrangements relating to the multifamily and commercial mortgage market, and on the workout, restructuring and sale of distressed financial assets, including real estate-related debt and syndicated bank loans. We have further assisted clients in the development and execution of commercial mortgage loan origination programs, and in the creation of real estate-related derivative products.
     
  • Trade and Supply Chain Finance: The group represents major US and foreign commercial banks in trade receivables financings and supply chain financings that are typically documented in the form of receivables purchase facilities. We have extensive experience with both invoice and draft programs, supplier-led and buyer-led programs, proprietary and third party programs (including the PrimeRevenue program) and internet-based platforms. Our expertise with securitization structures and bankruptcy true sale issues enables us to provide practical and efficient advice with regard to transactions that our clients wish to structure as sales. Many of the transactions we handle involve sellers or obligors located in foreign countries, and we regularly work on facilities that have parties located in Canada, Europe and Asia. We frequently advise on transactions that utilize credit insurance or other forms of credit support or that provide for the sale of risk participations to other financial institutions.
     
  • Emerging Asset Classes: Our group has represented issuers, underwriters, warehouse lenders and trustees in connection with the securitization of a number of emerging asset classes, including entertainment royalties, credit default swaps, farm credit loans, lottery receivables, sub-prime auto loans, charged-off credit-card receivables, life settlements, and home security receivables. Because the market is still developing definitive standards for the securitization of some of these asset classes, the group’s lawyers must work closely with all parties to the transaction (including the rating agencies) to develop structures that will both satisfy the financial concerns of the parties and enhance the acceptability of the ultimate product to investors in the capital markets.
     
  • CLO/CDO/CBO/CFO: The group has acted as issuer’s counsel in CLO/CDO/CBO/CFO transactions, including deals backed by emerging assets and synthetic securities. The group has acted as deal counsel for completely synthetic CDO transactions and for CDO transactions backed by pools of asset-backed securities, hedge fund investments, private equity investments, commercial real estate, as well as transactions backed by credit default swaps. The group has also represented trustees, collateral managers, senior investors and subordinate investors on numerous CLO/CDO/CBO/CFO transactions and has been active on behalf of investor, trustee and collateral manager clients on numerous CDO or CLO liquidations.
     
  • Derivatives/Securities/Repurchase Agreements: We actively document and advise on derivatives transactions and repurchase agreements documented under ISDA Master Agreements, Credit Support Annexes and related documents, including advising on termination rights, set-offs, netting rights, dispute resolution provisions and recovery of posted collateral. We have also designed complex and tax-efficient funds to acquire distressed portfolios of securities, whole loans and synthetic products, and enter into derivatives to transfer or hedge counterparty risk exposure.
     
  • Investment Funds: We have organized various funds and other investment vehicles in connection with the acquisition of mortgage loans, structured products, CMBS, mezzanine loans, B-Notes, aircraft and other debt products. For example, we organized and documented a fund that invests in TALF-eligible collateral, including legacy and newly-issued CMBS.
     
  • Other Structured Finance Experience: The firm’s lawyers are experienced in rating agency issues and are often called upon to handle the rating aspects of securitized transactions. Our experience and familiarity with the issues and the agencies enables us to guide clients in structuring both individual transactions and loan originations for new programs so that they receive agency approval. Members of the group are well-versed in the accounting and bank regulatory rules applicable to securitizations, and can assist clients in structuring transactions so that they qualify for accounting sale treatment and, in the case of banks, regulatory capital relief.