Schulte Roth & Zabel partner Martin Sharkey was featured in a PitchBook article that discussed the wide array of tools European Collateralized Loan Obligation (CLO) managers have to handle stressed and distressed assets. According to the article, the expected restructuring of Altice France’s debt could compel CLO managers to reclassify some obligations, potentially using less common tools like uptier priming debt, loss mitigation obligation or bankruptcy exchange buckets. Despite their underuse, these tools are crucial in a challenging market with sophisticated sponsors. 

Martin highlighted the balance CLO managers must strike between flexibility and investor safeguards. “Managers like the flexibility to be able to add loss mitigation obligations and uptier priming debt to the portfolios, but it is quite common to receive pushback from debt investors on this flexibility,” he said. Martin further explained that these tools are seen differently by various investor groups, with some viewing them as essential defense mechanisms, while others prefer to limit their use due to concerns over manager expertise. 

Read the article, “European CLO managers ready toolkit to deal with stressed assets.”

Schulte Roth & Zabel partner Douglas Mintz was recently quoted in an article discussing the evolving legal landscape surrounding “good faith” bankruptcy filings, particularly in the context of Johnson & Johnson’s ongoing talc-related litigation. Doug noted that a seemingly healthy entity might still file for Chapter 11 due to “contingent liabilities that aren’t obvious to an observer,” highlighting the complexities courts face in determining good faith. Commenting on the ongoing challenges in these cases, Doug described the “never-ending metronomic back and forth where bankruptcy lawyers push the boundaries.”

Read the article to learn more about this important issue.

Schulte Roth & Zabel partner Kelly Koscuiszka provided analysis for an article that discussed the recent CrowdStrike outage as a test case for the new Form PF amendments, which require large hedge fund advisers to file a report within 72 hours of significant disruptions to “critical operations.” The outage, which affected millions of Windows devices, prompted fund managers to consider whether they needed to file a report. However, the impact on the hedge fund space was minimal and most managers did not find the outage significant enough to trigger a report, noted Kelly.

Kelly explained that while the outage did not impact most clients, fund managers were generally prepared to assess such disruptions and determine their reporting obligations. She emphasized the importance of having clear policies and documentation for such events. Although the SEC did not provide specific guidance during the outage, the incident served as a reminder for fund managers to stay vigilant and ensure that any potential disruptions are properly evaluated and documented.

Read more here.