“Sources praise the depth, diversity and technical excellence of Cadwalader's derivatives practice, and it receives plaudits for its expertise on structured products, including liquidating defaulted CDOs, CLO issuances and credit-linked notes.” – Chambers USA
Any law firm working with distressed structured products must have expertise in the intricacies of each type of investment as well as a unique understanding of the economic, legal, and practical challenges that the current economic environment poses for those in the government and private sectors. Cadwalader is in a unique position to address the issues raised by these troubled investments. Our collective experience in this field, including the creation and structuring of derivatives, securitized products, structured commercial real estate products, commercial and residential mortgage-backed securities, collateralized debt obligations, and synthetic securities, has given us tremendous insight into the rights, obligations, issues, and concerns of the parties involved in these transactions and, as commercial lawyers, we have a long history of bringing parties together to resolve difficult issues and achieve successful results.
As a result of our extensive experience, our attorneys have been active in representing clients in workouts of troubled structured vehicles, helping to evaluate and resolve exposures to troubled clients, and setting up funds and other vehicles to acquire troubled assets. We represent clients exposed to bankruptcies of finance companies and FDIC receiverships of banks. We have also been active in advising clients as to legal developments intended to improve the U.S. financial crisis, such as the federal Emergency Economic Stabilization Act of 2008 ("EESA"), and loan modification programs adopted by financial institutions to forestall home foreclosures. In addition, in recognition of our wide ranging expertise in these areas, the firm serves as counsel to ASF's important Project on Residential Securitization Transparency and Reporting, also known as Project RESTART, an effort to restore investor confidence in mortgage- and asset-backed securities.
Securitization: As a recognized leader in all forms of securitization, we are well-positioned to assist servicers and issuers in connection with workouts of commercial mortgage loans in order to help alleviate or respond to stress on related properties, help the parties navigate the often complex documentation requirements and limitations, and negotiate workouts on defaulted assets. Many of our workout assignments have involved securitized mortgage loans, requiring us to consider the interests of certificate holders, junior participation holders/B Note holders, mezzanine lenders, servicers and trustees. Similarly, our extensive experience in the origination of mezzanine loan financings, in many cases with numerous levels of mezzanine sub debt and complicated intercreditor arrangements among the mortgage lender and various mezzanine lenders, makes Cadwalader uniquely qualified to analyze and evaluate the rights and remedies, and related risks, facing mezzanine lenders with troubled loans.
Our expertise in residential mortgage securitization qualifies us to advise on strategies and limitations related to workouts and modifications of securitized residential mortgage loans. We understand the legal, regulatory, and practical reasons for relevant restrictions on servicing in RMBS deals, and can help clients consider options for modifying such restrictions to bring much needed relief to families facing the loss of their homes. We also are well-versed in the policies and initiatives embodied in the Hope for Homeowners Act.
CDOs: In connection with workouts of distressed and defaulted asset backed securities, CDOs, commercial real estate CDOs, CLOs and leveraged loan warehouse transactions, both cash and synthetic, we have conducted extensive negotiations with all affected parties, including trustees, rating agencies, investors, warehouse lenders and credit enhancement providers. We also have represented clients in the establishment of funds or other vehicles to acquire such assets. Because of our prominent position in the CMBS market, Cadwalader has taken a leading role in connection with distressed CRE CDOs, with a particular emphasis on troubled real estate asset workouts. We also have extensive experience in representing traders of distressed debt, including negotiation of trading done pursuant to the Loan Syndications and Trading Association, Inc.'s documentation, credit opportunity funds, and other structured funds. Cadwalader has advised on all aspects of workouts including analysis of default and enforcement provisions, amendments to deal documents and liquidations of collateral by both public and private sales under Article 9 of the Uniform Commercial Code.
Derivatives and Structured Credit Products: We work with derivative and structured credit product market participants on (i) document reviews in order to assess and determine exposure to distressed counterparties; (ii) the implementation of amendments and application of best practices to current documentation in order to reduce exposure to counterparties; (iii) counterparty risk management strategies, including, but not limited to, the development, structuring, negotiation and documentation of master netting and set-off agreements, swap participations, contingent interest rate swaps, contingent loan only credit default swaps and contingent credit default swaps that include derivative termination obligations as deliverable obligations; (iv) the development and implementation of structures that permit CDOs, CLOs and similar vehicles to workout the securities issued by them and to permit the modification or termination of credit default swaps, all in a tax-efficient manner; (v) derivatives issues, including, but not limited to, the auction process and methodology in the credit default swap market; (vi) termination rights and strategies in respect of trading contracts with insolvent counterparties, and the related termination documentation; and (vii) the development, structuring, negotiation and documentation of various synthetic funding structures in both single asset and static or managed portfolio form.
Structured Investment Vehicles and Commercial Paper: With SIVs facing ongoing operating challenges, including higher funding costs, constrained liquidity, and depressed valuations, Cadwalader attorneys are helping with restructuring efforts to mitigate a variety of market risks, protect creditors, and provide for an orderly unwinding of the commercial paper programs in which many SIVs have invested. During the current liquidity crisis, we have restructured numerous commercial paper conduits in order to allow them to function and operate in this extremely difficult environment, and we have negotiated and worked closely with rating agencies, enhancement providers, and other service providers involved in these restructurings. Our strong relationships with such parties allows us to effectively and efficiently assist clients to successfully restructure commercial paper conduits.
Whole Loan Purchases and Sales: Given the recent market volatility, our Capital Markets attorneys have been active in the work out or close out of warehouse finance facilities and repurchase finance facilities. In working with our UCC specialists as well as bankruptcy lawyers with significant experience in these types of facilities, we are able to utilize the experience that we have gained in prior liquidity crises to counsel our clients.
Funds and Other Opportunities: Our attorneys also represent opportunistic clients in connection with the establishment of funds or other vehicles to acquire leveraged loans, CLOs, CDOs, whole loans, and real estate, residential and commercial, performing and nonperforming, as well as in the purchase of those assets. We counsel clients in negotiating servicing arrangements and in the purchase of servicing and origination platforms. We are well-versed in the regulatory, tax, bankruptcy, licensing and other legal issues that arise in these activities. We have also structured residential, multi-family and commercial mortgage loan conduits; revolving credit/commercial paper facilities secured by commercial real estate and other assets; purchases and retrades of residential and commercial loans from the FDIC; servicing and/or pooling of mortgage loans for sale to various government or quasi-government agencies or as part of private or public pass-through transactions; and warehouse and gestation repos and financings and transactions with FMNA, Freddie Mac, GNMA and HUD. Cadwalader has a well-earned reputation for innovation in this area, having participated in the first FNMA multi-family swap.