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Distressed Debt and Claims Trading

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Overview

Our Clients

Our experienced, multidisciplinary Distressed Debt and Claims Trading team guides investment banks, commercial banks, financial institutions, domestic and international hedge funds, special opportunity funds and asset managers through the acquisition and sale of distressed assets, including bank loans, corporate bonds, trade claims and swap claims, as well as privately traded securities. We have represented investors in connection with thousands of transactions with an aggregate value in the billions of dollars.

Our Services

The Distressed Debt and Claims Trading practice combines the talents of attorneys from several disciplines across the firm's US offices and London affiliate, including derivatives, structured products, financial services, syndicated loan markets/distribution, insolvency and restructuring, private equity, and tax, to provide tailored legal advice and transactional support for all aspects of distressed debt and claims related transactions. Our sophisticated and knowledgeable team has particular strength in handling bespoke opportunities for our clients, offering a comprehensive approach to complex trades. Many of our attorneys have spent time working in business roles or as senior in-house attorneys giving us a unique commercial edge in terms of understanding a client's business.

We routinely represent clients in the acquisition of trade claims against debtors in insolvency proceedings in the United States and in Canada. These transactions involve the transfer of secured, administrative expense and general unsecured claims. In addition to negotiating transfer documentation, we often advise on applicable regulatory and compliance issues associated with such transactions. We also provide diligence into the validity and size of the claims and assist our clients in assessing risk. When disputes arise in bankruptcy cases, we support our clients (whether original or secondary holders) in the negotiation of settlements with the debtors' estate.

Our experience in secondary loan trading transactions includes providing credit agreement and bespoke covenant analysis; reviewing complex intercreditor arrangements; negotiating, drafting and reviewing trade confirmations, purchase agreements, participation agreements, proceeds letters and collateral agreements for both par and distressed trades; and advising on transfer documentation related to spin-off equity and debt instruments. We advise on standardized and bespoke non-disclosure and confidential information issues arising in loan trading and guide our clients through "know your customer" requirements when necessary.

Katten is a member of both the Loan Syndications and Trade Association (LSTA) in the US and the Loan Market Association (LMA) in the UK and Europe. Our attorneys regularly sit on LSTA and LMA committees and are actively involved in the continued development of industry standards. The firm's international presence ensures that clients operating in the US and European markets have complete access to our resources in "real time."

With robust and cross-disciplinary industry knowledge, deep transactional capabilities and extensive debt and claims trading experience, Katten's Distressed Debt and Claims Trading practice offers a comprehensive approach to this specialized investment strategy.

Experience
  • Negotiation of trade confirmations, purchase and sale agreements, participation agreements, transferability reviews and collateral agreements based on the LSTA and LMA agreements for par and distressed trades. Katten attorneys are experienced advisors on issues relating to confidential information issues in loan trading. Recently, our attorneys have counseled clients in the following credits: iHeart Media, Neiman Marcus, Rue 21, Commercial Barge, Paragon Offshore, Dynamic Energy, J Crew, Quicksilver, Sabine, Samson, Overseas Shipping, Caesars, Eagle Bulk, Arch Coal, Education Management, EFH/TXU, Longview Power, Mesa Air Group, Avaya, Tribune and many others.
  • Representation of hedge funds and broker-dealer clients in their acquisition and sale of secured, administrative priority and general unsecured claims arising from foreign and domestic insolvency proceedings. In addition to the negotiation of transfer agreements, Katten provides diligence review of the credit and claim along with mechanisms to manage credit risk exposure. Representative matters include Seadrill Limited, Westinghouse, Lehman Brothers (foreign and domestic), Target Canada, Toys R Us, Sears Canada, Indiana Toll Road, Caledonian Bank, Bernard L. Madoff (feeder-funds and direct investors), MF Global, Icelandic banks, Bank of Cyprus, OW Bunker, Rio Forte and AHAB.
  • Representation of sellers and buyers in sales and acquisitions of defaulted and near-defaulted mortgage loans and loan portfolios.
  • Representation of hedge funds engaged in financing transactions, including loan origination, investments in funds engaged in financing transactions, and structuring incubation arrangements with investment managers in this space.
  • Representation of collateralized debt obligation (CDO) and collateralized loan obligation (CLO) investors in due diligence reviews of issuer documentation and collateral acquisitions; counsel to investors and collateral managers in restructurings of CDO and CLO transactions.
Events
December 5–7, 2013
ABI's 25th Annual Winter Leadership Conference | Rancho Palos Verdes, California
Distressed Debt and Claims Trading

Recognition

Legal 500 UK – Financial Services
Financial Services, 2012
Chambers Global – Investment Funds: Hedge Funds
Investment Funds: Hedge Funds, 2014
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Recognition

Financial Services, 2012
Investment Funds: Hedge Funds, 2014
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