Structuring Direct Lending Funds: Open-Ended vs. Private Equity/Closed-Ended Style Structures; Valuation; Tax and ERISA; Regulatory Considerations

A live 90-minute CLE webinar with interactive Q&A


Wednesday, September 27, 2017 (in 5 days)
1:00pm-2:30pm EDT, 10:00am-11:30am PDT


This CLE webinar will examine issues associated with the formation and operation of direct lending funds, with a focus on those organized to lend to small and medium-sized businesses, and to real estate developers and other RE market participants.

Description

Small and medium-size businesses are increasingly looking to direct lending funds, as opposed to banks and other traditional lenders, as a source of financing. This disintermediation between banks and borrowers has been driven to a great extent by the imposition of additional regulatory requirements on banks the calculation of their capital, and conducting various banking activities.

Conversely, over the past decade, there have been numerous private investment funds organized to offer this same financing abdicated by many banks. To a meaningful extent, this has been driven by both the dynamics effecting banks, plus the gyrating and unpredictable capital markets in the period between 2008 and today.

Listen as our authoritative panel examines the structuring options available to direct lending funds and the tax ramifications of each. The discussion will include “season and sell,” corporation blockers and RICs, and their advantages and disadvantages for different investor groups.

Outline

  1. Current lending climate—demand for nontraditional lenders
  2. Structuring options for direct lending funds
    1. Standard LLC or partnership—when all investors are U.S. taxable investors
    2. “Season and sell”
    3. U.S. corporation blocker, owned by off-shore private equity fund, invests in U.S. loan origination fund
    4. Closed-end registered investment company

Benefits

The panel will review these and other key issues:

  • Is there a standard structure for direct lending funds?
  • Comparing open to closed end structures, including the following key considerations: valuation and marketing
  • Further structuring considerations: how to structure to accept investors that are U.S. non-taxable and offshore
  • Most common tax structuring tactics for these investors: “season and sell” vs. corporate blocker structures
  • Further structuring considerations: how to structure to accept investors that are primarily ERISA/IRA entities? Focus: conflicts of interest with affiliated service providers
  • Key regulatory issues: valuation (from SEC perspective), conflicts of interest with affiliated service providers, principal transactions, calculation of AUM (i.e., "Regulatory Assets under Management")

Faculty

Alex Gelinas, Partner
Sadis & Goldberg, New York

Mr. Gelinas focuses his practice on providing tax advice to investment managers of hedge funds, private equity funds and other investment funds on all aspects of their businesses, including management entity and fund formation, partnership taxation issues, compensation arrangements and ongoing investment activities and transactions. He also provides tax advice to U.S. pension funds, sovereign wealth funds and other U.S. and foreign institutional investors in connection with their investments in private equity funds, hedge funds and U.S. joint ventures.

Steven Huttler, Partner
Sadis & Goldberg, New York

Mr. Huttler has extensive experience in corporate, finance, investment fund and securities matters, including the representation of U.S. and foreign investment funds, underwriters, and private clients in various registered public and private offerings of debt and equity securities totaling in excess of $10 billion. His legal practice has exposed him to diverse fund clients with an exceptionally wide range of investment programs and structures, including large mutual funds and hedge fund complexes, private equity firms, real estate partnerships and funds, venture capital funds and funds focused on specialty finance assets. 

Daniel G. Viola, Partner
Sadis & Goldberg, New York

Mr. Viola is the Head of the Firm’s Regulatory and Compliance Group. He structures and organizes broker-dealers, investment advisers, funds and regularly counsels investment professionals in connection with regulatory and corporate matters.


Live Webinar

Live Webinar $297.00

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This webinar is eligible for at least 1.5 general CLE credits.

CLE credits are not available for PR.

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Recordings

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Banking & Finance Law Advisory Board

Irving C. Apar

Partner

Thompson Hine

Mark N. Berman

Adjunct Professor

Northeastern University

Willa Cohen Bruckner

Partner

Alston & Bird

Lawrence Kaplan

Of Counsel

Paul Hastings

Kevin Petrasic

Partner

White & Case

Laura D. Richman

Counsel

Mayer Brown

Robert M. Stern

Partner

Orrick Herrington & Sutcliffe

Andrew Stutzman

Partner

Stradley Ronon Stevens & Young

or call 1-800-926-7926

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