Working at the forefront of the loan and claims trading market, we put our clients in excellent position to make the right deals at the right time. Our team brings our clients the insight and knowledge that come from being a strategic part of creating the models the market uses to do business. Alston & Bird keeps you in the loop so you can stay on top of the market.
Alston & Bird’s Distressed Debt & Claims Trading Team advises buy-side and sell-side clients, including broker-dealers, investment banks, hedge funds, CLOs, private equity funds, and other investment entities in all aspects of the primary and secondary trading markets of domestic and international par and distressed debt, private securities, bankruptcy claims, and other obligations of distressed companies. One of the largest in the nation, our trading team is able to closely monitor market developments and issues, assisting clients in efficiently and timely addressing their most pressing needs.
In addition to identifying risks associated within a given transaction and framing the ideal structuring and settlement options, our trading team has extensive experience drafting and negotiating trade confirmations, purchase and sale agreements, participation agreements, collateral agreements, proceeds letters, securities purchase agreements, vendor put agreements, rights offerings, total return swaps, and other related trading and financing documentation. We frequently guide clients through all aspects of portfolio transactions, including due diligence, analysis of regulatory issues, coordination and supervision of local counsel, and negotiation and drafting of bid, sale, and transfer documents.
Being part of an Am Law 100 firm gives us a competitive edge over boutique trading firms. Our team effectively leverages the resources of Alston & Bird’s national and international capabilities by working closely with some of the brightest attorneys from multiple disciplines—insolvency and restructuring, finance, regulatory and compliance, structured products, financial services, private equity, derivatives, and tax—to comprehensively manage risk preferences, navigate complex capital structures, and efficiently advise our clients in all phases of their debt, equity, and claims-related transactions. Clients frequently consult with restructuring and finance attorneys at Alston & Bird before making investment decisions to better understand the investment opportunities and risks in different asset classes within a company’s capital structure.
We are active in both the Loan Syndications and Trading Association (LSTA) and the Loan Market Association (LMA), serving on committees and working groups and taking leadership roles in developing trading conventions and drafting updates to standard documentation for the loan trading markets. The LSTA frequently calls on our team to assist in developing market guidance on trading conventions to address current market issues and promote market efficiency and liquidity. Team members regularly speak as panelists at LSTA and LMA conferences covering a range of topics, including secondary trading issues, documentation, and settlement. Our team also provides customized in-house training seminars to clients on issues related to the debt, equity, and claims trading markets.
LSTA Loan Trading: Representing banks, investment banks, broker-dealers, buy-side institutions, CLOs, hedge funds, and other financial institutions in all aspects of primary and secondary bank debt transactions, including the drafting and negotiation of documents that are subject to terms and conditions published by the Loan Syndications & Trading Association (LSTA). We perform due diligence on the credit agreement and other ancillary loan documentation in connection with drafting, structuring, and negotiating purchase and sale agreements and other transaction documentation. We stay apprised of public information relating to the borrower and the given credit facility to guide clients through any issues that might arise during the settlement process. When a borrower or related obligor is the subject of a bankruptcy proceeding, we continually monitor the bankruptcy case and advise clients of any issues that might relate to restructuring support agreements, adequate protection orders, rights offerings, DIP financings, NOL orders, and any other issues pertaining to the general bankruptcy case that affect secondary loan transactions. We are well versed in working with electronic settlement platforms in all aspects of loan trading transactions, including ClearPar and Virtus.
LMA Loan Trading: Representing financial institutions in par/near par and distressed Loan Market Association (LMA) bank debt and claims transactions, including drafting, structuring, and negotiating trade confirmations and funded participation agreements. LMA loan documentation is typically utilized by market participants when trading credit facilities that are governed by UK law or other non-U.S. law. Our New York and London offices work closely in performing due diligence on underlying credit documentation and related ancillary loan documentation. We regularly work with local counsel on different cross-border jurisdictional, regulatory, and restructuring issues relating to issues germane to secondary loan trading, including lender eligibility, transfer issues, perfection of collateral and security in foreign jurisdictions, and different insolvency regimes.
Loan Participations: Advising clients in all aspects of participation agreements, from the negotiation of key terms of the transaction (e.g., voting rights, collateral terms, guaranties, subsequent transfers of the participation, etc.) to the execution of all documents. In addition to drafting and negotiating the underlying participation agreement and related collateral annex, we help clients navigate any collateral issues and assist with perfection of security interest in underlying collateral. We are also experienced in structuring, documenting, and negotiating master participation agreements in different situations, including portfolio loan transactions. We are well versed in structuring loan participations and master loan participations to satisfy “true sale” requirements for bankruptcy remoteness purposes and experienced with preparing true-sale legal opinions relating to bespoke participation agreements.
Private Equity Transactions: Representing various financial institutions in the secondary trading market for private securities (e.g., notes, common stock, preferred stock, warrants) that are received in connection with an in-court or out-of-court restructuring. We review the certificate of incorporation, bylaws, limited liability company agreements, stockholder agreements, registration rights agreements, and other applicable operative documents along with drafting and negotiating securities purchase agreements, representation certificates, stock powers, opinion letters, and other related transfer documentation. We are also well versed in structuring and documenting private equity transactions where right of first refusal, right of first offer, tagalong, or drag-along issues are implicated. In tandem with settlement, we directly coordinate with third parties (transfer agents, company counsel, etc.) to ensure a valid and effective transfer of the securities in compliance with securities laws.
Bankruptcy Claims: Representing banks, hedge funds, riskless principals, broker-dealers, and other financial institutions in their acquisition and sale of secured, administrative priority, and general unsecured claims arising from domestic and foreign insolvency proceedings. We provide diligence review of the underlying proofs of claim and supporting documentation, advise the client of the various risks (including recovery and counterparty risk), and draft and negotiate the transfer documentation and file any transfer notices required under bankruptcy law to effectuate a record transfer of the underlying claim. Our extensive experience of over 20 years in this space allows us to guide clients through some of the complexities inherent in the claim trade markets while also helping to mitigate our clients’ risk exposure.
BWIC and Portfolio Transactions: Advising buy-side and sell-side institutions in all aspects of portfolio sales and bid wanted in competition (BWIC) transactions, including the structuring of bid procedures and processes, the review of due diligence items related to the underlying assets, analyses of regulatory issues, the coordination and supervision of local counsel, and the drafting, structuring, and negotiating of transaction documentation.
Proceeds Letters: Represented secondary trading market participants in transactions that settle via proceeds as a result of an underlying borrower’s in-court or out-of-court reorganization. As part of the settlement process, we interact with debtor’s counsel and other relevant parties concerning the issuance and transfer of the proceeds and negotiate and review all relevant transfer documentation related to debt, equity, and non-assignable proceeds (including litigation trust interests).
Trade Confirmations: Advising and assisting clients in memorializing terms of trade by structuring and negotiating LSTA, LMA, and bespoke trade confirmations for par/near par and distressed loan transactions, bankruptcy claims, private equity, portfolio transactions, and sales of bilateral loans, in addition to other types of transactions. Interacting with clients in real-time situations to craft, negotiate, and document specific other terms of trade to be included in trade confirmations, such as providing explicit voting rights from and after the trade date.
Alternative Settlement Transactions: Structuring, negotiating, and documenting transaction documentation for alternative settlement arrangements, including bilateral netting agreements, multilateral netting agreements, derivative payment rights agreements, and total return swap transactions.
Agency Transfers: As a natural outgrowth of our secondary loan transaction work, representing parties that take over a controlling interest in loan credit facilities and look to take over agency roles. Our team works closely with other finance attorneys who regularly work with different financial institutions in representing clients in the role of administrative and collateral agents. Our team will diligence, document, structure, and negotiate the transaction documentation necessary to facilitate the transfer of such agency roles, including the transfer of any collateral in connection with secured credit facilities.
Nondisclosure Agreements: Preparing, reviewing, and negotiating nondisclosure agreements for clients in the purchase and sale of loans, bankruptcy claims, private equity, derivative transactions, and portfolio loan transactions.
Big Boy Letters: Drafting, structuring, and negotiating “big boy” letter agreements when one party to a transaction may have access to borrower-restricted information that is not available to another party to a transaction. We regularly advise clients on issues relating to LSTA code of conduct rules for trading on syndicate-level information, borrower-restricted information, and risks of trading on borrower-restricted information and disparity of information.
Litigation Trade Disputes; Broken Trades: Working closely with commercial litigators at our firm who have a great deal of experience in successfully negotiating and litigating broken loan, claim, and private equity transactions. Through our vast experience in closing thousands of transactions over the past 20 years, our group is adept at understanding the pros and cons of each party’s side in a disputed trade transaction.
ISDA Master Agreements, Credit Default Swaps, and Total Return Swaps: Working with clients for the past two decades in advising institutional investors on their structuring, negotiation, and documentation of ISDA master agreements, credit support annexes, total return swaps, and ancillary documentation for all derivatives products. Our distressed debt and trading team works closely with members of our firm who focus on derivative documentation.
Client Advisories and Client Teach-ins: Providing clients and friends with targeted and up-to-the-minute client advisories on the latest developments in both the loan trading and claim trading marketplaces. Our client advisories are focused on new documentation put forth in the marketplace by the LSTA and LMA as well as focusing on new case-law developments relevant for the par/near par and distressed loan and claim trading environment. Additionally, our team will often inform our clients of different trends we are seeing in the secondary market. We also regularly meet with our clients to provide teach-in seminars on different market issues affecting the primary and secondary loan trading market.
Full-Service Am Law 50 Firm Practices: One of the competitive advantages of the Distressed Debt & Trading Team is we are not a law firm that focuses primarily on loan and claims trading. Our team is one part of a large, diverse Am Law 50 law firm that has experience across all industries. Being part of such a large, diverse law firm allows our team to fully leverage the resources of our firm by working closely with attorneys in other practice areas, including finance, insolvency and restructuring, private equity, regulatory and compliance, structured products, derivatives, financial services, health care, tax, and litigation.
LSTA and LMA Organizations: Our team is extremely active in both the LSTA and LMA organizations, serving on committees and working groups, assuming leadership roles in developing trading conventions, and providing updates to standard documentation for the loan trading markets. Our team stays abreast of all new documentation and regularly provides client advisories and alerts to our clients and friends regarding new developments in the LSTA and LMA. Members of our team regularly speak at different LSTA conferences. In December 2019, our team spoke at an LSTA distressed trading documentation teach-in focusing on the LSTA distressed purchase and sale agreement.
Outside Counsel to LSTA: Advising and assisting the LSTA on different market issues and assisting in drafting both primary and secondary loan trading documentation. Served as counsel to the LSTA in drafting the par delayed compensation rules, primary delayed compensation rules, and various market advisories concerning a broad array of loan trading and settlement topics. We regularly speak with the LSTA about different trading issues arising in the secondary loan trading market. We have been engaged to assist the LSTA in implementing a master participation agreement to help implement the Main Street Lending Programs under the CARES Act.