Lovells have been advising the receivers of SIV Portfolio plc (in receivership) (formerly known as Cheyne Finance plc), a $7bn investment vehicle formerly run by London-based hedge fund Cheyne Capital, on the Goldman Sachs-led restructuring of the portfolio of asset-backed receivership assets announced on 17 June 2008.
On 17 June 2008, Neville Kahn, Nicholas Edwards and Nicholas Dargan, partners at Deloitte & Touche LLP (the Receivers) receivers of SIV Portfolio plc (in receivership) (formerly known as Cheyne Finance plc) (the SIV vehicle) announced that the SIV vehicle had entered into a restructuring agreement and portfolio sale agreement with Goldman Sachs International (GSI). Under the restructuring arrangements, the SIV vehicle has agreed to sell a portion of the portfolio of debt securities held by it to GSI and the remaining debt securities will be sold to market participants pursuant to an auction process.
Commentators in the marketplace have suggested that this groundbreaking deal potentially represents a positive development in the credit turmoil of the last year by drawing a line under the problems encountered by the SIVs, which have appeared to sit right in the eye of the perfect storm of credit illiquidity and declining asset values. Commentators have also suggested that the restructuring could be a blueprint for the restructuring of other SIVs to follow.
The SIV Portfolio / Cheyne team at Lovells was led by Robin Spencer (Partner and Head of Business Restructuring and Insolvency (BRI)) and James Doyle (Partner, Capital Markets). Andrew Carey (Partner and head of the London Capital Markets practice), Jonathan Malim (Senior Associate, London Capital Markets practice) and Kit Johnson (of counsel and head of the firm's corporate trustee practice) led the team advising The Bank of New York Mellon (BNYM) as security trustee for SIV Portfolio plc (in receivership). The BRI team included Paul Apathy (Senior Associate). Regulatory advice was led by Dominic Hill (Partner). The U.S. law team was led by Robert Ripin (Partner, Capital Markets) and Adam Solowsky (Of Counsel, Capital Markets) and litigation by Hugh Lyons (Partner) and John Tillman (Senior Associate). Clifford Chance partner David Steinberg has been advising GSI on the transaction.
Lovells is also representing the partners of Deloitte & Touche LLP as receivers of Rhinebridge Plc (in receivership) (Neville Khan, Nicholas Dargan and Debbie Young). We are also representing BNYM as security trustees of Mainsail II Limited (in receivership) and Golden Key Limited (in receivership).
Through these mandates Lovells has demonstrated a market-leading position in complex financial restructuring and developed a unique expertise in this field.
Robin Spencer said:
"Our involvement in this high profile transaction is testament to our market-leading financial restructuring, capital markets and corporate trustee practices and, in particular, our long-standing relationships with Deloitte & Touche and The Bank of New York Mellon."
A SIV is an investment company which seeks to generate investment returns through a yield arbitrage between on the one hand, investments in highly-rated medium- and long-term fixed income instruments (including residential mortgage-backed securities (RMBS) and collateralised debt obligations (CDOs) and on the other hand, the funding of such investment by the issuance of lower cost short-term debt instruments in the form of asset-backed commercial paper (ABCP) and asset-backed medium term notes (MTNs). Typically, capitalisation of a SIV includes subordinated debt (Capital Notes) which take the first loss position on the underlying investment portfolio.
Several SIVs have seen the market value of their underlying investments deteriorate under hostile market conditions, with RMBS and CDO assets particularly affected.
In addition to the Cheyne team mentioned above, the Lovells SIV team includes David Hudd (Partner, Global Head of Finance and co-leader, with Andrew Carey, of the Rhinebridge Capital Markets team), Natasha Williams (Senior Associate, Capital Markets), Jennifer O'Connell (Associate, Capital Markets) and Caroline Rasaiah (Associate, BRI). Special mentioned is deserved by Zip Jila (Trainee, Capital Markets and, later, BRI) who has been involved from the outset on all SIV transactions.
Lovells' Business Restructuring and Insolvency group
Business restructuring and insolvency has been one of Lovells' core fields of work for more than 60 years. Our clients include banks, other financial institutions, financially distressed companies, insolvency practitioners and turnaround specialists from all the major accountancy firms, investment banks and specialist advisory institutions, as well as creditors and directors of companies in financial difficulty.
Lovells' Captial Markets group
Lovells' capital markets practice has dedicated lawyers in all of the major financial centres and provides a full service to our clients by combining the skills of our English and US lawyers with local expertise across our international network. Our lawyers are ideally placed to advise on all capital markets activities from securitisations (including CDOs and project bonds), repackagings, credit derivatives and debt securities offerings (including programmes and bank subordinated debt qualifying as regulatory capital) to international equity and equity linked offerings and equity derivatives. We regularly act for arrangers, managers, issuers and trustees
Lovells' Trustee Practice
The Lovells' Trustee Practice offers quality legal services to trustees, agents and transaction service providers across the whole range of capital markets and structured debt products. We are the market leading practice for advising trustees in relation to distressed structured finance transactions.
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With over 3,000 people operating from 26 offices in Asia, Europe and the United States, Lovells is one of the world's leading international law firms. We advise many of the world's largest corporations, financial institutions and governmental organisations. We regularly act on complex, multi jurisdictional transactions as well as some of the most high profile commercial disputes. Lovells (the "firm") is an international legal practice comprising Lovells LLP and its affiliated businesses.
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