Sector developments and company hires

Recovery package fast-tracked
The Securitisation Capital Markets Recovery Package measures have been published in the EU Official Journal, meaning that the STS synthetics framework and improved non-performing loan ABS rules will come into force on Friday. The amendments are being fast-tracked at an unprecedented pace, coming into force only a fortnight after the European Parliament voted on them (SCI 26 March). AFME, for one, has welcomed the publication of the new securitisation rules in the OJ as an important step towards providing more lending to the real economy and to accelerate the region’s Covid-19 recovery.

In other news…

CFPB SLABS lawsuit dismissed
Judge Maryellen Noreika of the US District Court for the District of Delaware has dismissed a lawsuit brought by the CFPB against National Collegiate Master Student Loan Trusts, finding that the suit was constitutionally defective due to the CFPB’s untimely attempt to ratify the prosecution of the litigation in the wake of the Supreme Court’s decision in the ‘Seila Law LLC v. Consumer Financial Protection Bureau’ case.

A recent Cadwalader memo notes that the case is of particular relevance to the structured finance industry because the litigants had disputed over the question of whether the ABS trusts in the litigation are ‘covered persons’ liable under the Consumer Financial Protection Act, despite their status as passive securitisation trust entities. The securitisation industry operates on the premise that agreements governing securitisations provide that transaction parties are responsible for their own malfeasance and, barring special circumstances, will not be held accountable for the misconduct of other parties to the transaction. A decision holding that passive securitisation entities are ‘covered persons’ under the CFPA - and thus potentially responsible for the actions of their third-party service providers - would undermine the certainty of contract terms that underpins the structured finance industry, according to Cadwalader. 

Internalisation agreement inked
Colony Capital subsidiary CLNC Manager has signed definitive agreements with Colony Credit Real Estate to consensually axe their management agreement. This transaction is a result of CLNC’s previously announced strategic alternative review process and is consistent with Colony Capital’s ongoing digital transformation and strategic plan.

Colony Capital will continue to own approximately 48 million shares, representing 36.1% of the outstanding shares of CLNC, following the closing of this transaction. In connection with this internalisation, Colony Capital will not seek re-election for its affiliated directors on CLNC’s board when their terms expire at CLNC’s upcoming annual shareholders meeting in May 2021. The company has also agreed with CLNC to enter into a new stockholders agreement, which will become effective upon closing of the internalisation transaction.

The transaction, which is subject to certain customary closing conditions, is expected to close in 2Q21. At that time, the management agreement between Colony Capital and CLNC will be terminated.

North America
Peter Hancock has joined the board of ILS marketplace Ledger Investing. Hancock previously served as president and ceo of AIG. Before that, he was JPMorgan’s cfo and chief risk officer, after 20 years leading fixed income and derivatives businesses. He also served as vice chairman at KeyBank.

Ira Reid has joined McLaughlin & Stern as special counsel to the bankruptcy and restructuring group. Reid was formerly a partner at Baker & McKenzie and prior to that, practiced at LeBouef, Lamb, Greene & MacRae. His expertise lies in the bankruptcy implications and resolution of complex structured finance transactions, repurchase agreements and credit derivatives, including swap transactions.

The firm has also promoted partner Steven Newburgh to the position of chair of its bankruptcy and restructuring group. The practice group's former chair Paul Silverman has become special counsel to the firm, but will continue to be an active member of the group. 

Morgan Lewis has strengthened its structured transactions practice with the addition of partners Steven Becker and Alex Velinsky, who will be resident in New York and Washington, DC respectively and arrive from Hunton Andrews Kurth. Becker focuses on residential and commercial mortgage-related collateral and advises clients on deals involving a variety of loan asset classes, including flow purchase programmes to online lending platforms. Velinsky handles financing transactions for borrowers, lenders and servicers involving residential and commercial mortgage loans, RMBS, CMBS, servicing advances and servicing rights.

Stuart Kovensky has stepped down as Onex Credit’s co-ceo and cio, but will remain on the firm’s board. Co-ceo Jason New has been named head of Onex Credit as a result. Prior to joining Onex Credit, New was a senior md at Blackstone and co-head of distressed and special situtioan investing for GSO.