Accrued Interest - A Finance Newsletter from Haynes and Boone, LLP, December 2015


Welcome to the inaugural edition of Accrued Interest - a nascent newsletter which will be published several times a year by the Finance Practice at Haynes and Boone. We will provide timely and concise information about changes, developments and trends in legal issues relating to finance transactions, as well as news and profiles about the diverse group of attorneys who comprise our domestic and international Finance Practice. We hope to keep you interested, informed, and occasionally amused. Please don't hesitate to contact our lawyers if you have questions on any of the topics we are covering. Have a safe and happy holiday.

Click here to view the December 2015 Accrued Interest Finance Newsletter PDF.

Trends In Finance Law: Prepayment Penalties – Express Language Aids Enforcement
By Deborah Low and Sue Murphy

Loan agreements commonly contain provisions permitting or requiring the early repayment of all or a portion of the indebtedness under the loan agreement prior to the stated maturity date of such indebtedness. These provisions may specify that prepayments may be made at any time, at the borrower's election ("Optional Prepayments"), or that prepayments must be made upon the occurrence of certain events ("Mandatory Prepayments"). Several courts have recently examined whether the acceleration of the maturity of indebtedness under a loan agreement, either automatically, in the event of certain events of default, or at the election of the lenders in accordance with the terms of the loan agreement, constitutes a prepayment of the loan that would give rise to the obligation of the borrower to pay a premium or penalty.
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International Legal Developments: Iran Nuclear Sanctions Being Lifted
By Eric Filipink and Edward Lebow

Trade relations with Iran and the legal framework that governs them are going to be changing markedly in the near future as longstanding trade sanctions which were implemented to curtail Iran's nuclear capabilities are being lifted. The Iran nuclear deal, more formally known as the Joint Comprehensive Plan of Action (JCPOA), has come into effect as of "Adoption Day" on October 18, 2015. It survived both the 60-day U.S. Congressional review period which concluded on September 17 and opposition from hardliners in Iran's parliament, which approved the deal on October 13. Although Adoption Day had already occurred, the deal overcame its final hurdle a few days later on October 21 when it finally won approval from Iran's Supreme Leader Ayatollah Khamenei. Agreed upon between Iran and its negotiating partners - the United States, United Kingdom, France, Russia, China, Germany and the European Union - the JCPOA will roll back Iran's nuclear program and subject Iran to years of international monitoring in exchange for sanctions relief.
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Recent Case Analysis: First Circuit Confirms that Right to Payment under Insurance Policy Not Covered by Article 9 of the UCC
By Steven Epstein, Alexander Grishman and Craig Unterberg

When a company enters into a secured line of credit, it presumably expects to repay the lender on a timely basis. But what happens when an unforeseen tragic event results in economic collapse and bankruptcy for the borrower? If there are monies resulting from an insurance settlement with the borrower, the lender may wish to claim these proceeds to repay the loan. Unless the insurance proceeds are deemed "proceeds" of collateral, an interest in an insurance policy is outside the purview of Article 9 as recently reaffirmed by the First Circuit Court of Appeals.
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Trends in Finance Law: Decline of the "Dead Hand" Proxy Put
By Monika Sanford and Scott Night

Should parties extending credit be allowed to accelerate their debt solely as a result of a change in the majority of the borrower's Board of Directors? As shareholder activism continues to rise, lender-friendly covenants known as "dead hand" proxy puts in credit agreements and indentures have recently faced increased judicial scrutiny. The flood of litigation has been driven, in part, by the conclusion of the Delaware Court of Chancery in October 2014 that "dead hand" proxy puts are "highly suspect" entrenchment tools employed by lenders and corporate borrowers to discourage shareholder activism. In an effort to avoid costly litigation, lenders and noteholders are rethinking the value, and evaluating the risk, of including "dead hand" proxy put provisions in their debt agreements.
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Attorney Spotlight

Gil Porter - Partner

Gil Porter has led more than 150 project development and project finance transactions, and has advised on hundreds of others, in more than 35 countries throughout the world. For more than three decades, clients have reached out to Gil, Co-Chair of the Project Finance and Development Practice and a Partner in the Finance Practice Group of Haynes and Boone's New York office, for his guidance in connection with first-of-a-kind transactions, addressing new technologies, innovative structures and markets, and novel adaptations of existing products. Most recently he has been actively representing lenders and borrowers in connection with the second lien up-tiering model that is helping to redefine the oil and gas industry.

Gil is a founding member of the Finance practice at Haynes and Boone's New York office, which was launched in 2004. "We have built our New York Finance Section with market-leading practices in different complementary areas, including prime brokerage, commodities finance, subscription finance, trade finance and, of course, projects," says Gil. "These practices provide complementary opportunities, while at the same time helping us to establish a market reputation in the New York finance community."

As Gil puts it "the practice of law permits lawyers to develop skills in a range of different industries – the only limitation is how much time and effort we are willing to invest." Gil's clients and peers agree that Gil is a lawyer who has taken the time and invested the effort to develop that experience in the pursuit of serving his clients and the profession.

We'd like to hear your feedback and suggestions for future newsletters. Please contact the lawyer below.


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