The qualities on which rankings are assessed include technical legal ability, professional conduct, client service, commercial astuteness, diligence, commitment and other qualities most valued by clients. Consequently, the SPE is usually structured to avoid entity-level taxation. This other question of the Trusts vicarious liability for the servicers conduct remains a critical open point and is likely subject to further years of litigation before it is decided or may not be decided at all if the case is settled. and 'Why Shearman & Sterling specifically?' The intersection of legal and accounting requirements often plays a significant role in structuring a securitisation transaction. Shearman & Sterling advised Qxpress Pte. questions because we want to see a genuine interest in us as a firm. In this structure, one SPE acts as the depositor (typically structured as an LLC) and the other SPE is the issuer (typically structured as a trust). The courts have also identified a variety of other factors that do not fall within the categories above but may be indicative of a secured loan, including: Some states have sought to bolster securitisations by restricting recharacterisation of a purported sale transaction. Subjects Cambridge Academic Anthropology Archaeology Arts, theatre and culture Chemistry Classical studies Computer science Earth and environmental science Economics Education Engineering General science Geography History Languages and linguistics Law Life science Literature Management Mathematics Medicine Music Philosophy Physics and astronomy In one recent matter, the firm advised Greek food company Chipita on its sale to a subsidiary of Mondelez International for 1.7 billion. Not surprisingly, the more numerous the secured loan characteristics, the greater the likelihood that the transaction is viewed as such. Indeed, trainees told us that it is almost certain you will have to work evenings and the odd weekend at some point. Hoursgenerally start at 9.30am and finish around 7.30pm on average, but dont fret too much: time off is well respected, and most teams track it if you are working more than four hours at the weekend. Trainees felt well compensated for these hours too. The CLO issuer will typically be organised as a Cayman Island company and structure its loan acquisitions in a manner that avoids it being engaged in any US trade or business, as discussed in 2. However, as a practical matter, SPEs organised in the USA overwhelmingly tend to be organised as a limited liability company or a statutory trust. Shearman & Sterling LLP stands out for its expertise in high-profile energy and infrastructure projects in Indonesia, as demonstrated by its advice to Masdar and PT PJB Investasi on the development and financing of a 145MW floating solar PV project over the Cirata reservoir. who circulates opportunities weekly via email. Generally, the opinion will describe the salient facts and analyse these facts in light of the factors identified by the courts as relevant to the true sale determination. The work you do as a trainee has a bigger impact.. Sponsors are typically in the business that generates the relevant underlying receivables or other financial assets, and also will typically organise and initiate the ABS transaction and engage in selection of the relevant assets. A guide to legal practice areas. According to data provided by the Securities Industry and Financial Markets Association (SIFMA), the most commonly securitised financial assets are: Common structures used for the various types of securities previously outlined (see 8.1 Common Financial Assets) include the following. In the early 1970s, long before Raheem Sterling was on the scene, another famous Sterling pulled on an England shirt. Its clients, both issuers and underwriters, are among the most highly respected global financial services institutions and the practice understands the evolution of structures because it was involved in many of the industrys significant firsts. Radiance Capital Investments Limiteds $300 Million Senior Green Notes Offering. If its the international side of the firms work that youre keen on, then there arent many places youll find more of it than in international arbitration. In addition, a non-consolidation opinion is often required if the transfer is to an affiliated entity (ASC 860-10-55-18A), although the opinion may not be required if the accountants are comfortable that the appropriate legal opinion(s) would be given if requested (id at 55-18B). Two rounds, the first includes an interview and the second a proper assessment centre with a group exercise, a written exercise, a case study and another interview. The required asset-level disclosure must be provided in a standardised format in a tagged XML format and filed on the SECs Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. As such, an awareness of the types of features that drive the consolidation analysis is often important in structuring the SPE and drafting the relevant transaction documents. The servicing provisions generally relate to continued collection and servicing of the relevant asset and typically include a number of provisions relating to reporting, notice and turnover of collections. There is current and publicly available information (consistent with Rule 15c2-11(b)) about the issuer, and the staff would consider the Information Requirement discussed in Section II.C. A security interest in deposit accounts can only be perfected by control. The extent to which regulators will address securitisation industry feedback on rules that are not yet final remains to be seen. On the other hand, if such transfer is treated only as a granting of a security interest in collateral, then a bankruptcy of the seller will subject the buyers rights with respect to such assets to the automatic stay and other bankruptcy powers. It is also worth noting that the non-recourse language typically included in agreements with SPEs, including derivative agreements, would cause such derivatives to fall outside the standard terms for derivatives that are currently centrally cleared and traded, although that may change should swaps with such terms be included as part of a traded standard. At the time the ARRC fallback recommendations were released, term SOFR rates were purely theoretical: SOFR was primarily an overnight rate, measuring the cost of borrowing cash overnight as collateralised by US Treasury securities in the repurchase agreement market. Shearman & Sterling Apply now The Legal Cheek View New York heavyweight Shearman & Sterlings finances have returned to form, with an 18% jump in global revenue to $1.01 billion To provide broader relief, Congress passed the Adjustable Interest Rate (LIBOR) Act (the LIBOR Act), which was signed into law in March 2022. The form also gives trainees the option of requesting a secondment. However, there is significant uncertainty around a bankruptcy courts acceptance of such statutes, and securitisations are therefore typically structured to comply with the judicially created true sale criteria. As noted above, both the SEC and the CFTC have comprehensive regulations around entering into derivatives, and such instruments may be subject to clearing, settlement and margin requirements specified in the securities acts and the Commodities Exchange Act. Department profile | Shearman & Sterling LLP. Number of lawyers worldwide: 800+. Establishing a bankruptcy-remote special-purpose entity (SPE) is a key aspect of a typical securitisation transaction. Any Exchange Act violation could also result in equitable remedies, including the right of rescission. The proposed rules would also prohibit private fund advisers from engaging in certain compensatory and other practices which have the effect of creating conflicts of interests between private funds and their advisers. Section 3(c)(7) provides a general registration exemption for issuers that do not publicly offer their securities and limits their investors to qualified purchasers. The ARRCs approach was not meant to be a binding directive, but merely an example of how an ABS product could be created using average SOFR. Most of the remaining ABS are issued in private placement, typically in a manner that permits resales in compliance with Rule 144A. In response to feedback from industry groups, the SEC issued a no-action letter in December 2021, which established a tiered set of compliance dates in an effort to allow brokers and dealers time to bring themselves into compliance. By establishing a wide base of technical knowledge, experience and understanding of each clients needs, we advise clients on their most critical tax matters, including reducing overall tax costs and developing tax-efficient investment and operating structures. Shearman & Sterling Insurance companies capital requirements are subject to state regulation. Under the GAAP accounting rules, a true sale opinion from an attorney is often required to support a conclusion that transferred financial assets are isolated from the transferor and its consolidated affiliates. Variations on the ARRC recommended fallback language are now commonly included in US securitisations. In determining whether a transfer is a true sale or a disguised loan, courts look to a number of factors. However, the recent October amendments to the Volcker Rule allow for a small bond basket, thereby removing one of the restrictions that have prevented CLO managers from engaging in a bond/loan arbitrage that was popular prior to the promulgation of the Volcker Rule. For example, an opinion assuming that the transfer is a true sale for accounting purposes would have to carve out the legal isolation analysis from such assumption. SPEs established as single-member LLCs or Delaware statutory trusts can be readily structured to avoid entity-level tax. Consequently, the risk of substantive consolidation is generally addressed by requiring the SPE and its credit to be separate from its affiliates based on factors that speak for substantive consolidation identified in the case law. Trainees whod experienced other vac schemes were won over by Shearman & Sterling: Some firms give you fake pieces of work and put on too many socials. the transferor being a debtor of the transferee on or before the purchase date; the transferors ability to extinguish the transferees rights in the transferred assets by payments or repurchase by the transferor or from sources other than collections on the asset; and. This no-action letter withdrew the December 2021 letter, but effectively extended Phase 1 under the December 2021 letter until 4 January 2025. Morgan Lewis lawyers wrote the books that structured finance lawyers rely on: Offerings of Asset-Backed Securities and The Federal Securities Law of Asset-Backed Securities. Shearman & Sterling represented the initial purchasers in connection with Jiayuan International Group Limiteds offering of $130 million 11% senior notes due 2024. Partnerships and entities treated as partnerships are also generally treated as pass-through entities for tax purposes, depending on the number of partners, the trading activities in any equity (or securities deemed to be equity for tax purposes) in such partnerships and the availability of relevant safe harbours. Violations of the swaps rules promulgated by the CFTC will be subject to enforcement and penalties by the CFTC. At the time of this writing in January 2023, there is no longer any relief that extends after that date. Phase 2 was scheduled to extend from 4 January 2023 through 4 January 2024, and Phase 3 was scheduled to begin on 5 January 2024 and extend indefinitely. Shearman & Sterling is one of the worlds leading law firms, serving the domestic and cross-border needs of an impressive roster of clients. Shearman & Sterling represented the initial purchasers in connection with Shinsun Holdings (Group) Co., Ltd.s offering of $200 million 12% senior notes due 2023. the parties intent, though courts typically de-emphasise the language used in a document and instead consider the intent reflected by the economic substance and actual conduct; recourse and collection risk, which generally is the most important factor; the transferors retention of rights to redeem the transferred property or to receive any surplus from the asset; and. On the basis of in-depth research, Chambers and Partners identifies the worlds top lawyers in more than 175 countries, providing independent rankings and editorial commentary. The firms structured transactions practice serves the financing needs of the worlds most sophisticated businesses. As the old saying goes (sort of): with great responsibility, comes great hours. Typically, the power to exercise such rights and remedies is given to the trustee with provisions that entitle the trustee to obtain directions backed by indemnification. The trainees we spoke to let us know that the majority of trainees want to qualify into M&A and finance but of course teams cant facilitate everyones wants. The firm didn't disclose its 2022 retention figures. For example, this can be done by using a tax-transparent organisational form or by incorporating the SPE in a jurisdiction that does not impose such taxes. Chambers and Partners guides offer in-depth analysis of the legal market within countries and regions across the globe. 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