Client Alerts & Publications Archive

On May 14, the Basel Committee on Banking Supervision issued two documents entitled “Criteria for Identifying Simple, Transparent and Comparable Short-Term Securitisations” and “Capital Treatment for Simple, Transparent and Comparable Short-Term Securitisations.” 

Under 1991 US guidance, if a non-US partner sold its interest in a US partnership, the selling partner would look through to the business of the partnership and would be required to file a US tax return and pay US tax if the partnership would have had income effectively connected to a US trade or business on a deemed sale of its assets. But that guidance was reversed in a tax court case. Then the US position was reversed again in the Tax Cuts and Jobs Act.

Recently in Hackler v. Arianna Holding Co., the U.S. District Court for the District of New Jersey held that a real estate tax foreclosure sale can be set aside as a preferential transfer under Section 547 of the Bankruptcy Code.

Today, the Basel Committee on Banking Supervision issued two documents entitled “Criteria for Identifying Simple, Transparent and Comparable Short-Term Securitisations” and “Capital Treatment for Simple, Transparent and Comparable Short-Term Securitisations.”

For non-US individuals and corporations that invest in real estate within the US, the rules that subject their gains to US federal income tax generally are found under Section 897. The Foreign Investment in Real Property Tax Act rules have often been attacked as a disincentive for overseas investors to enter the US real estate market.

On April 18, the Securities and Exchange Commission released a new interpretation addressing investment advisers’ fiduciary duties to their clients. The SEC’s proposed interpretive guidance reaffirms and clarifies duties owed by investment advisers to their clients under Section 206 of the Investment Advisers Act of 1940.

On April 18, the Securities and Exchange Commission proposed new Regulation Best Interest under the Securities Exchange Act of 1934 that would establish a federal standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. 

The Securities and Exchange Commission recently proposed new and amended rules and forms under the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934 to require registered investment advisers and broker-dealers to provide a brief relationship summary to retail investors regarding their offered services, the standard of conduct and fees associated with the services.

Today, the Securities and Exchange Commission voted 4 to 1 to propose highly anticipated new and amended rules and guidance relating to registered investment advisers’ and broker-dealers’ conduct and interactions with retail customers.

On April 9, 2018, Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York, in In re Avanti Communications Group PLC, held that non-consensual third-party releases included in a U.K. scheme of arrangement were enforceable under chapter 15 of the United States Bankruptcy Code.

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently published a Risk Alert that highlights frequently-identified investment adviser fee and expense compliance issues from exams of over 1,500 investment adviser examinations during the past two years.

Chapman’s "Defaulted Securities: The Guide for Trustees and Bondholders" advances understanding and consideration of issues related to trustees and bondholders in both corporate and municipal financings.

This article describes the impact of the Tax Cuts and Jobs Act on securitization transactions. The article addresses in detail the new limitation on the deduction for business interest expense as well as the requirement that the transferee of an equity interest in a partnership engaged in a US trade or business withhold 10% of the amount realized unless the transferor certifies that it is a US person. 

The question of what happens when a debtor files a Chapter 13 bankruptcy petition as a means of redeeming sold real estate taxes is being addressed throughout the country with more regularity. Recently, bankruptcy courts in Illinois and Georgia have provided some insight into how this question should be answered.

In light of the increasing significance of cybersecurity incidents, the SEC published a press release and additional Commission-level guidance regarding disclosure obligations relating to cybersecurity risks and incidents, which reinforces and expands upon the SEC staff guidance provided in 2011 and addresses two additional topics.

Although recent legislation commonly referred to as the Tax Cuts and Jobs Act retained Section 956 of the Internal Revenue Code (and its notorious deemed dividend issue), the enactment of other changes may reduce the impact of Section 956 on taxpayers.

The US Court of Appeals for the District of Columbia Circuit recently issued a decision in a case that involved a question of whether the risk retention requirements imposed by Section 941 of the Dodd-Frank Act required open market CLO managers to retain risk in those transactions they managed. 

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently released its 2018 National Exam Program Examination Priorities. Highlights from the 2018 exam priorities are reviewed in this Client Alert. 

Czyzewski v. Jevic Holding Corporation made some court-watchers nervous that the decision would be applied broadly to disturb other bankruptcy-related distributions.

In a decision likely to have a far-reaching effect in the municipal debt markets, the Court overseeing Puerto Rico’s bankruptcy-like Title III proceeding ruled that holders of municipal obligations secured by a pledge of special revenues are not guaranteed payment during the pendency of a bankruptcy proceeding.

In bankruptcy cases where a not-for-profit corporation is closely related to or controlled by a governmental unit, a creditor may challenge the not-for-profit corporation’s bankruptcy eligibility, arguing that the not-for-profit corporation is, in substance, a “governmental unit” and therefore not eligible to file a Chapter 11 petition.

In July, Andrew Bailey, the CEO of the United Kingdom’s Financial Conduct Authority, announced that the FCA and the panel banks whose submissions are used to determine the London Interbank Offered Rate will only sustain LIBOR until the end of 2021.

This article addresses the benefits to a senior secured lender of Representations and Warranties Insurance, and certain considerations financial institutions should make in documenting a middle market loan transaction when an acquisition financing utilizes RWI.

The beginning of each year provides an opportunity for investment advisers to review compliance and regulatory matters, including issues related to private investment funds and commodity pools, which are briefly summarized in this alert.

On January 11, the Third Circuit issued a decision in a case that limited the reach of the Rooker-Feldman doctrine as a defense to bankruptcy avoidance actions. The court’s reasoning, however, has implications that go well beyond the particular facts of the case.

The Financial Industry Regulatory Authority, Inc. recently issued its 2018 Regulatory and Examination Priorities Letter. A number of FINRA’s comments direct firms to review the 2017 Examination Findings Report for additional insights into specific areas of concern and effective practices.

As state and local governments seek more creative financing methods for economic development projects, some have turned to the formation of subsidiary entities that can provide financing assistance, potentially without triggering debt limits under state or local laws or violating covenants under existing financings.

On December 22, 2017, President Trump signed into law the most sweeping tax law changes in the last thirty years. Highlights of the new tax reform legislation as they impact individuals are summarized in this Client Alert.

Overlooked in the many discussions about the new tax laws are the consequences on trusts and estates and the high likelihood trusts and their beneficiaries will see larger income tax bills for the next seven years. This Client Alert focuses on how the tax changes will impact trusts and estates, identify some of the significant uncertainties and provide recommendations for fiduciaries.

On December 20, Congress passed the act commonly referred to as the Tax Cuts and Jobs Act of 2017. Although no provision of the Act was designed specifically to address securitization transactions, two new sets of rules are likely to have significant effects on at least some securitization transactions

On December 15, House and Senate conferees reached an agreement on the Tax Cut and Jobs Act and released the final version of the Bill, which is expected to be voted on this week in the House and Senate.

On August 11, the IRS issued Rev. Proc. 2017-45 which allows publicly offered real estate investment trusts and regulated investment companies to make stock distributions that will qualify for the dividends-paid deduction, if certain requirements are met, and therefore enable a RIC or REIT to meet its minimum annual dividend distribution tests. 

An Illinois Bankruptcy Court held that a wedding or engagement ring worn by a man or woman, still married to the same person as when the ring was tendered before or during a wedding ceremony, qualifies as “necessary wearing apparel” under the Bankruptcy Code.

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain tax-exempt organizations if the compensation to a covered employee is more than $1 million.

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain exempt organizations, including certain state and local governmental entities, if the compensation to a covered employee is more than $1 million.

In an effort to provide insight into questions about the ability to assume, or assume and assign, intellectual property licenses through the bankruptcy process, Chapman attorney Peter Bach-y-Rita co-authored a recent article in the American Bankruptcy Institute Law Review. 

A debtor-in-possession is entitled to use cash collateral over the objections of PACA claimants so long as the debtor demonstrates that the interests of the PACA claimants are adequately protected, according to a recent ruling by Judge Dales of the United States Bankruptcy Court for the Western District of Michigan.

On November 2, Representative Brady released the “Tax Cuts and Jobs Act.” On November 9, the Senate Finance Committee released a “Description of the Chairman’s Mark of the ‘Tax Cuts and Jobs Act.’” This summary highlights four provisions in the proposed legislation that will be of particular interest to financial institutions.

Federal Rule of Appellate Procedure 4(a)(5) incorporates 28 U.S.C. § 2107(c), which provides for extensions of the notice of appeal deadline. However, Rule 4(a)(5)(C) limits the length of such extensions. The question then is if an appellant files a notice of appeal beyond the 30-day period set forth in Rule 4(a)(5)(C), does a circuit court lack jurisdiction to hear the appeal?

In addition to changes in life, changes in the estate tax rules over the last decade have altered the planning options available for many married couples. If the federal estate tax laws are actually repealed by the current Congress, these options will be relevant for all married couples.

Legislation recently passed by the Illinois House could impact every taxing district in the State if it ultimately becomes law. Senate Bill 851, which amends the Property Tax Extension Limitation Law, implements a tax freeze for certain taxing districts, and authorizes the implementation of a tax freeze for other taxing districts pursuant to referendum.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that appears aimed at subjecting public pension plans to unrelated business taxable income.

On November 2, Representative Kevin Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that creates a limit on the deductibility of interest. If enacted, this provision could have potentially wide-reaching impacts on securitization transactions.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. If enacted into law, the bill would eliminate all tax-exempt private activity bonds, tax credit bonds and all tax-exempt advance refunding bonds.

The staff of the Securities and Exchange Commission issued three no-action letters designed to assist broker‑dealers and investment advisers in addressing issues related to European Union directives and related legislation that will become effective on January 3, 2018.

The U.S. Court of Appeals for the Second Circuit reversed both the district court and the bankruptcy court’s decisions in MPM Silicones, LLC, which had held that the “prime plus” formula was the appropriate method for determining the interest rate required in connection with new notes issued to secured creditors under a Chapter 11 cramdown plan of reorganization.

The United States Court of Appeals for the Second Circuit has affirmed the district court and the bankruptcy court’s determinations in MPM Silicones, LLC that Momentive’s senior noteholders are not entitled to recover any make-whole premium on account of the replacement of their notes.

The United States Treasury Department has withdrawn proposed regulations dealing with the definition of “political subdivisions” for purposes of the tax-exempt bond provisions of the federal tax law. Political subdivisions are divisions of state or local governmental units that can issue federally tax-exempt bonds. 

In an environment of growing global mobility of many families and heightened regulatory and compliance pressures, many U.S. estate planning advisors are encountering international issues for their clients with increasing frequency.