Structured Preferred Equity: Documentation, Protective Covenants, Tax Treatment, Use in Debt Restructuring
Note: CPE credit is not offered on this program
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will examine the structuring and documentation of preferred equity investments in private companies. The panel will discuss protective covenants and the distinctions between preferred equity and debt, terms issuers and investors should consider to ensure equity treatment, and preferred equity as both a new money financing instrument and debt restructuring tool.
- Preferred equity: key features
- Straddling the line between debt and equity
- No maturity date: lack of control over exit
- Limited enforcement rights
- Subordinate to company debt and subsidiary equity
- Protective covenants
- Tax treatment: phantom income
- Preferred equity as a debt restructuring tool
The panel will review these and other important issues:
- How does preferred equity differ from traditional debt, and when is it a desirable alternative?
- What protective covenants are typically included in preferred equity documents?
- Can the dividend and repayment terms be structured to avoid phantom income?
- What are the potential uses of preferred equity in restructuring company debt?
Stephen A. Boyko
Mr. Boyko's primary focus is in finance transactions, particularly those involving private sources of capital. He... | Read More
Mr. Boyko's primary focus is in finance transactions, particularly those involving private sources of capital. He represents one of the largest client rosters in the industry, including an array of specialty finance companies, private debt funds, business development companies (BDCs), CLOs, sovereign wealth funds, insurance companies, hedge funds, private equity investors and issuers in connection with leveraged buyouts, growth capital investments, acquisition financings, going-private transactions, management buyouts, as well as other finance-related transactions, including innovative, first-in-kind transactions across the U.S. and in the UK.Close
David M. Hillman
Mr. Hillman is co-head of the Private Credit Restructuring Group and a member of the Business Solutions,... | Read More
Mr. Hillman is co-head of the Private Credit Restructuring Group and a member of the Business Solutions, Governance, Restructuring & Bankruptcy Group. He has 24 years of experience with an emphasis on representing private credit lenders, private funds, sovereign wealth funds, and other alternative lenders and distressed investors in special situations and restructurings both in and out-of-court, whether the lender is secured or unsecured, unitranche or structured preferred. He has substantial experience in every phase of restructuring and distressed investing, including credit bid sales under section 363, debt-for-equity swaps, chapter 11 plans, out of court restructurings, foreclosures, and navigating inter-creditor issues involving the relative rights of majority and minority lenders. He also litigates the issues facing private credit lenders, including issues involving plan confirmation, solvency, valuation, inter-creditor disputes, financing, and cash collateral disputes, fraudulent transfers, equitable subordination, recharacterization, breach of fiduciary duty and similar disputes.Close
Steven M. Peck
Mr. Peck is a partner in the Corporate Department and member of the firm’s Private Equity and Mergers &... | Read More
Mr. Peck is a partner in the Corporate Department and member of the firm’s Private Equity and Mergers & Acquisitions Group and its Structured Private Capital Group. He represents sophisticated private investment funds, multi-national corporations and other market participants in their most challenging transactional matters.Close