Company hires and sector developments

Chapter 11 filing

Highland Capital Management LP (HCMLP) has commenced voluntary Chapter 11 proceedings, citing a judgment that is being sought against it in connection with the defunct Crusader fund. Although Highland Capital Management disputes the underlying claims and believes it acted in the interest of investors, entry of the judgment in its maximum potential amount could result in a judgment against HCMLP greater than the entity’s liquid assets. Highland Capital Management notes that HCMLP is the only entity on its investment platform that has filed for Chapter 11 protection. HCMLP does not expect the filing to negatively impact any of its advised accounts or to lead to any employment or management changes. Crusade was a crisis-era fund and has been in liquidation since 2011. The liquidation plan established a committee of fund investor representatives to coordinate the liquidation process. Between 2011 and 2016, HCMLP distributed over US$1.55bn of the original account balance of approximately US$1.7bn. At that point, the committee filed a complaint against HCMLP resulting from a contract dispute over the timing of management fees and other related claims.

Eligibility requirements

The Bank of England recently published a market notice stating that to be eligible for its operations, ABS and covered bond issuers must both fulfil a number of transparency requirements, including completing its ABS-CERT template. As such, loan-level information and standardised monthly investor reports should be made publicly available at least quarterly and within one month after the relevant interest payment date. The prospectus for a deal, together with the closing transaction documents (excluding legal opinions), are also required to be dislosed. Additionally, for securitisations, a cashflow model should be made freely available by or on behalf of the originator/issuer. All of this information is expected to be placed on a website maintained by the issuer/originator (or by another party on their behalf).