On October 27, 2009, Senators Baucus and Kerry, together with Representatives Rangel and Neal, introduced the Foreign Account Tax Compliance Act of 2009 (the “Act”). The bill is the product of consultation between Congress and the US Treasury Department (Treasury) and is intended to curb the abuse of offshore bank and investment accounts by US taxpayers.
On September 22, 2009, the Office of Chief Counsel of the Internal Revenue Service (the “Service”) issued a memorandum to the Director of Field Operations for Financial Services in Manhattan (the “Memorandum”) setting forth its position and legal analysis with respect to certain lending activities undertaken by foreign corporations. The Memorandum concludes that a foreign corporation has income that is effectively connected with a banking, financing, or similar business activity within the United States (and thus is subject to net basis US federal income tax) when origination activities are performed in the United States by an agent of the foreign corporation.
We have previously written about legislative and regulatory developments facing the over-the-counter (OTC) derivatives market. These development include
a number of bills introduced in Congress as well as the framework outlined by the Department of the Treasury in the June white paper, “Financial Regulatory Reform: A New Foundation,” for a new regulatory regime for OTC derivatives to be implemented by legislation.
For Mayer Brown structured finance partner Chris Gavin, it was one of the toughest cross-border deals that he's ever handled. At first the job seemed fairly straightforward—arrange a syndicated credit facility for the Bangladesh Rural Advancement Committee (BRAC). The nonprofit microfinance and development organization, based in Bangladesh, was interested in expanding its operations into Africa. As part of a growing track record in the microfinance sector, Mayer Brown had advised on the creation of BRAC's U.S. arm. It was a logical step to reach out again to the firm to organize the new credit facility.
The Delaware Court of Chancery’s decision in San Antonio Fire & Police Pension Fund v. Amylin Pharmaceuticals, Inc. raises serious concerns for lenders regarding the protection afforded by “continuing director” change of control provisions in indentures and credit agreements.
As the impacts of the financial crisis continue to bite hard, lenders and borrowers are looking at alternative financing mechanisms. More and more businesses are appreciating the benefits of asset based lending.
The economic stimulus package, signed into law on February 17, 2009, grants corporations and businesses that repurchase their debt at a discount a right, under certain circumstances, to elect to defer the recognition of their cancellation of indebtedness (COD) income for up to five years.
Brian Trust and Rick Hyman quoted on debtor-in-possession financing in bankruptcy cases. “We will see more creative thinking on DIPs to get people involved… Some types of DIPs are riskier than others. That is a product of the business a company is in,” said Rick. “The best reason to consider a DIP is because of the fees,” said Brian. To read the full article, click here.
28 January 2009 - In response to the difficult market conditions, leading international law firm Mayer Brown has launched an international Asset Based Lending (ABL) Workout Group which combines the expertise of Mayer Brown's highly regarded Asset Based Lending and Receivables Financing Group with the Restructuring Bankruptcy and Insolvency Team.
Dominic Griffiths quoted on the launch of the asset-backed lending workout group at Mayer Brown. This group “will enable Mayer Brown to be more agile as it continues to advise on complex, cross-border transactions for world’s largest financial institutions and companies in challenging market conditions,” Dominic said.
In Helms v. CPC Acquisition (2008 WL 5396852 (C.A.7 (Ill.)), decided on December 30, 2008, the United States Court of Appeals for the Seventh Circuit addressed two issues of interest to secured lenders. The first issue was the extent to which recoveries for losses due to business interruption constitute proceeds of collateral.
16 January 2009 - Leading international law firm Mayer Brown has advised JP Morgan Chase on a complex asset-based lending transaction involving 17 jurisdictions for global fashion designer and retailer Liz Claiborne Inc. and its subsidiaries.
15 December 2008 - Certain fee letters associated with a postpetition financing can be submitted under seal under Section 107(b) of Title 11 of the United States Code (the "Bankruptcy Code") according to the United States Bankruptcy Court for the District of Delaware, which noted that the information in such fee letters constituted "confidential . . . commercial information." On December 8, 2008, Tribune Company and certain of its affiliates (collectively, "Tribune") filed voluntary petitions for relief under the Bankruptcy Code.
5 December 2008 - As a result of the recent credit market turmoil, some lenders are proposing significant changes to interest rate definitions in commercial loan agreements.
November 2008 - When constant proportion debt obligations (‘CPDOs’) were first issued, the credit spreads were so narrow that the products had to use maximum allowed leverage to make profi ts.
9 October 2008 - Mayer Brown LLP, a leading global law firm, announced today a Global Financial Markets Initiative to integrate and expand the firm’s activities to help clients deal with legal and business challenges resulting from the ongoing turbulence in worldwide financial markets.
13 June 2008 - Mayer Brown LLP, a leading global law firm, announced today that 121 of its attorneys are ranked in the 2008 edition of Chambers USA: America's Leading Lawyers for Business, including 36 who achieved top-band ranking or higher in 24 national and/or state categories.
12 June 2008 - Partners from five offices of Mayer Brown LLP, a leading global law firm, represented GMAC LLC and its wholly owned subsidiary, Residential Capital LLC, in one of the largest global refinancing projects ever completed. The $60 billion refinancing consisted of dozens of interrelated and complex transactions and involved more than 50 institutions worldwide.
9 June 2008 - Mayer Brown LLP, a leading global law firm, announced today that it will host a monthly series of informational teleconferences focusing on the business impact and legal challenges arising from the credit market disruptions that continue to propagate throughout the financial systems and market.
May 2008 - Education is critical to the growth and success of the industry, especially considering present economic conditions and potential recession. Supporting the CFA Education foundation's endeavors will ensure CFA members and their employees will have the benefit of the proper training when trouble come knocking.
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