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In the News

Albert Tan in PERE: Japanese Pensions Adopt Overseas Caution

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Gilbert Porter in Law360: Dealmakers Q&A: Haynes and Boone's Gilbert Porter

Gilbert D. Porter is co-chairman of the projects practice at Haynes and Boone, LLP. Over his 35-plus years of practice, he has led more than 120 project transactions in more than 35 countries throughout the United States, Mexico, the Caribbean, Latin America, Asia, Russia, the Middle East and South Africa, and has advised on several hundred more. >>

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Outbound Investing - Japan Goes Global

Presented at PERE Forum: Japan 2014. >>

Structuring Capital Call or Subscription Loan Facilities for Investment Funds

A webinar outlining approaches for structuring the loan facility, examining the underlying fund structure and fund document provisions, artfully drafting loan provisions, and performing comprehensive legal due diligence. >>

ISDA Publishes Form of Amendment to Address Uncertainty Regarding Section 2(a)(iii)

The International Swaps and Derivatives Association, Inc. (“ISDA”) has published a form of amendment to the 1992 and 2002 ISDA Master Agreements intended to address continuing uncertainty regarding the condition precedent set forth in Section 2(a)(iii) of both such Master Agreements (“Section 2(a)(iii)”). >>

ISDA Section 2(a)(iii): Problems and Solutions

In recent years, one clause of the ISDA Master Agreement has been the source of a great deal of consternation among derivatives lawyers: the condition precedent set forth in Section 2(a)(iii), which purports to suspend a party’s payment obligations in the event of a continuing default by the other party. >>

American Bankers Association Bank Compliance Magazine Guest Article: Responding to Examination Findings

Amid the industry's efforts to emerge from the global financial crisis, banks now encounter a new era in examination management. This era is marked by continuing regulatory uncertainty, economic instability, and heightened expectations from prudential regulators. >>

Private Equity Real Estate

Presented at the Global Alternative Investment Forum Japan 2014. >>

Bank of America Subscription Financings

Our Client
Bank of America, as agent or sole lender on subscription financings

The Opportunity
Haynes and Boone was involved in the early development of subscription lines as a product, and has represented major institutions in these financings since 1988.  Ten years ago, we helped Bank of America enter this space, and it is now the dominant institution on the lending/agent side.

Over the years, an unresolved ERISA issue had been hindering the efficient closing and operation of these deals.  We took the conservative position that the ERISA issue did, in fact, exist, and that the best approach was to obtain individual exemptions for each deal from the ERISA Prohibited Transaction rules.  Each deal involved an application for exemption to the Department of Labor, a process that often took several months.

Counsel for other banks making these loans took a less conservative approach, which we believed didn’t adequately address the risks for the lenders.

The Haynes and Boone Solution
Largely because of our risk-management approach on behalf of our client, Haynes and Boone had strong, effective relationships with the professionals at the Department of Labor.  As the volume of our subscription financings for Bank of America increased, Haynes and Boone lawyers determined that we should approach the DOL for a “global exemption” to the ERISA Prohibited Transaction rules, which would apply to any like-structured deal in which Bank of America was the agent or sole lender.

We worked for more than a year to draft language for a global exemption, respond to DOL inquiries, meet with its representatives, and ultimately obtain the global exemption we were seeking.  The DOL granted the exemption in February 2004, but made its effective date retroactive to January 2003.

The Outcome
The global exemption gave Bank of America a competitive edge, saving them considerable time and money on each subscription financing.  At the time, they were the only bank to have a global exemption, and the process confirmed to the broad market that our more conservative risk assessment of the ERISA issue was the accurate one.

Bank of America continues to hold its position as market leader in subscription financing, and our initiative and practical analysis that went against the risk-taking grain of other banks and their law firms turned out to be the most innovative and exactly the right approach.

For more information about this case study, please contact Tim Powers at +1 214.651.5610 or   or Ellen McGinnis at +1 202.654.4512 or  .