Structured finance

Since mid-2007, the world of structured finance has taken on a very different shape. In place of a steady flow of new issues, the greater part of the activity relates to non- or under-performing structures, affecting all types of structured and securitised transactions – RMBS, CMBS, other ABS, CDOs, CLOs, etc. Activity in this new world consists largely of restructuring and unwinding existing transactions, and in addition dealing with the consequences of defaults and disputes under transaction documents.

These developments have created new problems for all players in every type of structure – including arrangers, investors, rating agencies and asset managers. In particular, more attention is being paid to trustees and SPV issuers (and also directors of the latter), whose roles and responsibilities become much more prominent when the structure develops problems.

Our service

Our structured finance practice has never concentrated on working for arrangers on public deals. Instead, we have consistently worked for a broad range of other participants in structured finance transactions, including investors, issuers, originators, swap-providers, liquidity-providers, trustees and asset managers. This breadth of work has led to our having a complete understanding of the particular concerns of these participants. It has also meant that we have real experience of a far wider range of structured finance transactions than would otherwise have been the case – RMBS, CMBS (both true-sale and synthetic), other ABS, CDOs, CLOs, CPPI and CPDO products, SIVs and SIV-Lites and ABCP – covering the UK, Europe, the USA and Canada. We were actively involved in the Canadian ABCP market collapse in August 2007 as well as the first restructuring of a SIV in the same month.

Our experience

Our work over the past two years has primarily consisted of advising on restructuring transactions and advising on ‘problem’ issues or disputes that arise. We are now, though, starting to see a return of new issuances. Typically, these will involve the consequences of under- or non-performance of the asset pool underlying the structure or the insolvency of one of the transaction parties.

The restructuring work has taken many forms: each transaction has encountered its own difficulty, and often required innovative solutions.

In addition, we have acted on a number of transactions where market events have led to the structure effectively collapsing or needing to be unwound.

We have also advised on deals where the early termination or redemption provisions have been implemented, assisting clients with provisions that have not always taken effect in the way that was understood when the transaction was put in place.

In addition, we work on a wide range of structures where 'problem' issues have arisen including, structured deals where the swap-provider, the principal-protection provider or some other transaction party has entered insolvency. We have also advised clients who have undergone a ratings downgrade, and on how to deal with the consequences of minimum-ratings triggers being breached.