Company hires and sector developments

ACIS resets due

The Chapter 11 trustee has filed a third amended joint plan for Acis Capital Management and a notice confirming a court order that: conditionally approves its disclosure statement; schedules a combined hearing regarding final approval of the disclosure statement and confirmation of the plan; and sets related deadlines. The plan contains an injunction barring Highland Capital Management and its affiliates from liquidating the ACIS CLO 2013-1, 2013-2, 2014-3, 2014-4, 2014-5 and 2015-6 deals, except through reset transactions pursuant to the plan. Under the plan, the reorganised debtor - with the assistance of Brigade as its shared services provider and sub-advisor – states it is prepared to promptly seek to perform reset transactions for the deals. Noteholders must vote in favour of or against the plan via ballot by 26 November. The confirmation hearing has been scheduled for 11 December in the US Bankruptcy Court for the Northern District of Texas, Dallas Division. Objections to the confirmation of the plan must be served before 26 November and any response to any objection must be filed before 5 December.

Acquisition

LaSalle Investment Management has made a majority acquisition of the US$1.2bn debt fund business of Latitude Management Real Estate Investors (LMREI). The transaction is subject to customary closing conditions and is expected to be completed during the 1Q19. Upon closing, the Latitude debt business will join LaSalle’s North America private equity platform, which comprises US$21bn of the company’s total US$60bn in AUM and is led by Americas ceo Jason Kern. Latitude president and ceo Glenn Sonnenberg and evp Chip Sellers, along with mds Brett Mayer and Craig Oram, will continue to lead the debt fund business and LMREI’s 20 employees will continue to operate under the same structure, systems and processes, to provide continuity for all of the firm’s stakeholders. The senior management team of Latitude will retain a minority ownership position of LMREI and will be actively involved in the ongoing strategy, product development and growth planning process.

Neuberger Berman has acquired Cartesian Re, which with its affiliate Iris Re manages more than US$1bn in assets under management focusing on ILS. Cartesian Re was developed as a portfolio company of Cartesian Capital Group, which will work with Neuberger Berman to deliver ILS capabilities to clients globally. Cartesian Re will be renamed NB Insurance-Linked Strategies and Iris Re will be renamed NB Reinsurance. All Cartesian Re professionals - including mds Peter DiFiore, Cedric Drui and Charles Mixon - have joined Neuberger Berman and will continue to serve in their current roles.

Africa

Stephen Matthews has joined Bowmans as a director, based in its Nairobi, Kenya office. In his new role, he will be advising clients on financing transactions across Sub-Saharan Africa. Matthews specialises in structured and asset finance, trade and ECA finance, derivatives and financial restructuring. He was previously partner, head of banking, Russia at Allen & Overy and a member of the firm’s Africa Group.

Europe

REYL & Cie has further strengthened its structured finance capability in its London office with the appointment of James Spooner as md in corporate advisory and structuring. Spooner will be working closely alongside the bank’s structured finance head Ante Razmilovic to develop the business, working with clients to identify and execute bespoke alternative financing solutions. He joins from Goldman Sachs’ securities division, where he held a number of roles in exotic derivatives trading, and brings over 10 years of experience in structured investments, secured finance, securitisation and risk management.

Fairhold Securitisation

Following on from the last development in the Fairhold Securitisation saga (SCI 17 August), Clifden issued an application for permission to appeal against the order which stated, among other things, that Clifden – including Rizwan Hussain – have ever been authorised agents of the note trustee for the purposes of appointing administrators of the issuer, or otherwise. The permission to appeal was then opposed by the issuer, note trustee and Bowell and Coakley and refused by the court of appeal on 16 October 2018 on the basis that, among other things, the appeal against the order had no real prospects of success; the skeleton argument that accompanied the permission application did not identify which (if any) acts of the (purportedly appointed) administrators were valid and effective notwithstanding that the appointment of the administrators had never taken effect; and the reliance placed by Clifden on paragraph 59(3) of Schedule B1 of the Insolvency Act 1986 was misconceived.

Furthermore, notwithstanding the terms of the order, and the order of the Court of Appeal on 16 October 2018, correspondence has continued to be sent by or on behalf of Clifden and other parties believed to be related to Clifden and Hussain to the issuer, the note trustee and other parties in the Fairhold securitisation structure.  Amongst other things, this correspondence is premised on the assumption that acts done or purportedly done by Bowell and Coakley in their purported capacity as administrators are valid and effective.  In the circumstances, the Issuer has issued a further application to the Court, which is supported by the note trustee and Bowell and Coakley, seeking further declaratory and other relief from the court in order to put beyond doubt the effect of the order and to further restrain Clifden, Hussain, and the related parties from continuing to attempt to disrupt the affairs of the Issuer and/or undermine the Court's process. The order also required Clifden and Hussain to pay the costs of the Issuer (amongst others) on the indemnity basis and to make a payment of £275,000 in respect of those costs by 7 September 2018.  No payment has been received and the Issuer is actively considering the available enforcement steps.

German CRT completed

Arch Mortgage Insurance DAC has completed a capital relief transaction in the form of a financial guarantee on a €3bn subset of an ING DiBa German residential mortgage loan portfolio. The firm says the transaction is the first unfunded synthetic securitisation involving European mortgage assets and represents a “valuable new tool” for financial institutions in managing their regulatory capital. The structure follows EBA significant risk transfer guidelines and features pro-rata amortisation, with triggers to sequential. Arch Mortgage Insurance DAC is based in Dublin and provides credit risk management and capital optimisation solutions to clients throughout Europe.

LCR rules published

The updated Delegated Regulation for the liquidity coverage ratio (LCR) has been published in the EU Official Journal, making STS designation compulsory for ABS exposures - in addition to various requirements relating to liquidity, rating and quality – in order to count as HQLA. The changes will be introduced on 30 April 2020 and there is no grandfathering included for the STS requirement. HQLA treatment of ABS exposures remains at Level 2B, with haircuts ranging from 25% to 35%. 

NPL coverage agreed

The European Council's position on capital requirements applying to banks with non-performing loans on their balance sheets has been approved. On the basis of a common definition of non-performing exposures, the proposed new rules introduce a prudential backstop (a common minimum loss coverage for the amount banks need to set aside to cover losses caused by future loans that turn non-performing), with different coverage requirements applying depending on the classification of the NPLs as unsecured or secured and whether the collateral is ‘movable’ or ‘immovable’ (real estate). The rules provide for an increase in the minimum loss coverage levels to 100% over nine years for NPLs secured by immovable collateral, over seven years for NPLs secured by movable/other CRR-eligible collateral and over three years for unsecured NPLs. The next step is for the European Parliament to agree its stance.