Insights

As the United States government transitions from the Biden Administration to the Trump Administration, significant changes are already impacting infrastructure policy, with likely consequences to both planned and in-progress infrastructure projects around the country. Disruptions in funding and other policy changes are creating uncertainty for investors and stakeholders involved in infrastructure projects, particularly the potential impacts on projects funded under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act of 2022, as previewed in our January 18thclient alert, “Implications of Incoming Administration Changes to Infrastructure Initiatives.”

Form PF and the General Instructions have undergone significant revisions in recent years. The most recent changes, finalized February 8, 2024, with a fast-approaching March 12, 2025 compliance date, introduced prescriptive filing requirements regarding the aggregation of private funds and other entities, with significant changes to the General Instructions and Form PF questions.[1] The February 8, 2024 amendments follow the SEC’s May 3, 2023 amendments, which marked the first major update to Form PF since its inception and significantly expanded private fund reporting obligations. The SEC’s recent enforcement actions and significant amendments to Form PF have heightened regulatory expectations for private fund advisers. With the March 12, 2025 compliance date fast approaching, private fund advisers must prioritize compliance and operational readiness to ensure timely and accurate reporting of Form PF.  

In the ever-evolving landscape of English law credit agreements in the European leveraged loan market, the dynamics of lending have undergone significant transformations in the last few years. One issue that has gained prominence is the increase in limits on the ability of lenders to transfer their loans and the associated restrictions imposed on potential new lenders. European syndicated loan agreements have historically included a standardised and expected set of transfer restrictions applicable to prospective lenders, reflective of the market guidance and templates issued by the Loan Market Association (“LMA”). Certainty of terms and the capability of an existing lender to sell out of a loan position have been the hallmark (and expectation) of the LMA loan market. However, trends in the drafting of credit agreements have contained a concerning increase in limitations on loan liquidity. As a result, many lenders are finding it difficult to sell their distressed loans. This article explores these trends, as well as their implications on the secondary loan trading market.

On 29 June 2023, the long-awaited Financial Services and Markets Act 2023 (the “Act”) received Royal Assent, clearing the Act’s final hurdle prior to its implementation. The Act is the framework for the UK’s post-Brexit financial legislative and regulatory landscape.  Focusing on the promotion of competition, innovation and investor protections, it hopes to ensure the UK’s continued leadership in the global economy by providing “a smarter financial services framework”. While the Act is 349 pages in length, we have set out some of the key themes and regulations currently making headlines.

There are few things as daunting to a vendor or supplier as its counterparty’s bankruptcy. The likelihood of a significantly discounted recovery for goods and services provided and potential loss of a customer may have long-lasted impacts on profitability.  Even worse, however, is the prospect that payments received in good faith prior to a debtor’s bankruptcy filing may be at risk of recoupment. In this alert, we address the risk that such payments are voidable as preferential transfers. Section 547 of the Bankruptcy Code codifies the power of the debtor to recover payments that were made within the 90 days preceding the filing. Very generally, a debtor (or trustee) may recover any transfer that is (i) made to or for the benefit of a creditor (e.g., a payment or grant of lien), (ii) on account of antecedent debt (i.e., a debt already incurred), (iii) made while the debtor was insolvent, (iv) within the 90 days prior to the petition date (or one year for insiders), and (v) that enables the creditor to receive more that it would have in a liquidation. The parties’ respective intent is irrelevant.

It has been over two years since the UK Financial Conduct Authority (FCA) announced that all LIBOR settings will cease to be provided and market participants will not be permitted to reference LIBOR in their contracts. Since that announcement, various regulators, industry bodies and market participants have worked to transition from LIBOR to using risk free rates (RFR) in contracts.

In its long-awaited decision in Slack Technologies, LLC v. Pirani, 598 U.S. ___, No. 20-200 (June 1, 2023), the Supreme Court ruled that the tracing requirement of Section 11 of the Securities Act of 1933 applies to suits brought by investors in direct listings. Although the ruling definitively resolves an ambiguity in the statutory text, it leaves the door open to adverse consequences for both companies and investors in direct listings.

On February 24, 2023, the United States and other G7 nations announced a number of new sanctions and export control measures coinciding with the one-year mark of Russia’s military invasion of Ukraine. Shortly after these expansive sanctions and export controls were announced, the Departments of Justice (“DOJ”), the Treasury (“Treasury”), and Commerce (“Commerce”) issued their first-ever joint guidance regarding a planned crack-down by these agencies on sanctions and export controls evasion related to Russia in concert with DOJ’s sweeping announcements of a renewed focus on corporate compliance with sanctions and export controls.

On February 24, 2023, the United States and other G7 nations announced a number of new sanctions and export control measures coinciding with the one-year mark of Russia’s military invasion of Ukraine. Shortly after these expansive sanctions and export controls were announced, the Departments of Justice (“DOJ”), the Treasury (“Treasury”), and Commerce (“Commerce”) issued their first-ever joint guidance regarding a planned crack-down by these agencies on sanctions and export controls evasion related to Russia in concert with DOJ’s sweeping announcements of a renewed focus on corporate compliance with sanctions and export controls.

On February 28, 2023, the Commerce Department released the first Notice of Funding Opportunity (“First NOFO”) under the recently enacted CHIPS and Science Act (CHIPS Act), P.L. 117-167. The First NOFO seeks applications for assistance—including direct funding, loans, and loan guarantees—for projects to construct, expand, or modernize commercial semiconductor facilities.  

On February 15th, Daniel Werfel, the nominee for IRS Commissioner, testified before the Senate Finance Committee during his nomination hearing. As expected, Werfel faced tough questioning about how he would oversee the use of $80 billion in new funding coming to the IRS over the next decade. The Inflation Reduction Act, which passed late last year, appropriated the additional funding for the IRS to increase compliance and provide better customer service to taxpayers. 

On December 1, 2022, Department of Defense (DoD) Secretary Lloyd J. Austin III announced the establishment of the DoD Office of Strategic Capital (OSC).  The mission statement of the OSC is to build an “enduring technical advantage” for the United States by helping partner contractors with private investment to develop national security critical technologies, including those related to advanced materials, next-generation biotechnology, and quantum science.  OSC will coordinate with existing organizations such as the Defense Advanced Research Projects Agency (DARPA) and the Defense Innovation Unit (DIU), which promotes acceleration of the military use of commercial technologies.

In June, the crypto world saw the first signs of concern as cryptocurrency exchange Cred filed for bankruptcy. Since then, Crowell’s Digital Assets and Bankruptcy, Restructuring, and Insolvency teams have worked together counseling parties on their relative rights in these bankruptcy cases as well as assisting buyer and sellers of related claims. The news has only snowballed, and our Crypto Digest Blog has tracked the fast-moving crypto winter. In addition to client questions, our team has been quoted in The Wall Street Journal, Yahoo Finance, MarketWatch, CoinDesk, protocol, and The Journal of Bankruptcy Law.

Over a decade after Lehman’s insolvency, the English High Court handed down a key judgement in Grant v FR Acquisitions Corporation (Europe) Ltd [1] on 11 October 2022. The judgement provides commentary on when certain Events of Default have occurred and are “continuing”.

On August 8, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned virtual currency mixing service Tornado Cash, which OFAC said has been used to launder billions of dollars in virtual currency, including $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (“DPRK”) state-sponsored hacking group that OFAC sanctioned in 2019. Though OFAC’s action marks the second instance it has sanctioned a virtual currency mixer—OFAC sanctioned Blender.io in May 2022—this is the first time that OFAC has designated a non-entity software protocol. Tornado Cash is a “smart contract” that allows users to anonymize the origins, destinations, and counterparties for virtual currency transactions. 

President Biden will soon sign into law the Inflation Reduction Act (IRA), which provides $750 billion in funding and major federal policy changes impacting the U.S. energy, environment, healthcare and tax sectors. On August 7, 2022, the IRA passed the U.S. Senate by an all-Democrat 50-50 party line vote, with Vice President Harris breaking the tie and ensuring passage. On August 12, 2022, the IRA passed the U.S. House by a vote of 220 to 207. The President's signature, will make the bill law, and allow President Biden, U.S. Senate Majority Leader Chuck Schumer (D-NY), and U.S. House Speaker Nancy Pelosi (D-CA) to claim a major victory while making progress on a portion of the President's Build Back Better agenda just three months before the mid-term elections on November 8, 2022.

On June 28, 2022, the Financial Crimes Enforcement Network (“FinCEN”) and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a joint alert (the “Alert”), urging financial institutions regulated under the Bank Secrecy Act (“BSA”) to remain vigilant of efforts by third parties to evade the extensive U.S. export controls imposed on Russia and Belarus relating to Russia’s invasion of Ukraine. The Alert provides BSA-regulated financial institutions (“Covered Institutions”) with guidance on how to identify customers and transactions that may pose elevated export controls evasion risks. The Alert reflects the Biden Administration’s “whole of government” approach to prevent Russian circumvention of U.S. export controls. 

Investment companies and advisers would be subject to more stringent standards regarding how investment funds are named; and heightened disclosure requirements regarding Environmental, Social, and Governance (ESG) factors, under two proposals the Securities and Exchange Commission (SEC) issued on May 25, 2022. For example, the SEC proposes to amend the “Names Rule,” first implemented in 2001, to require that any fund using terminology such as “growth,” “value,” or “ESG” in its name must invest at least 80% of its assets in investments matching the name. The SEC also proposes to amend regulations under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 to require investment advisers to disclose information such as the carbon footprint of a fund that advertises that such information is part of the fund’s strategy. This proposal comes just two months after the SEC proposed sweeping disclosure rules related to climate-related risks, as described in a prior alert.

On April 7, 2022, the Federal Deposit Insurance Corporation (“FDIC”) issued a Financial Institution Letter (FIL-16-2022) (the “FIL”) requesting all FDIC-supervised institutions[1] (“Covered Institutions”) that intend to engage in or are currently engaged in activities related to or involving crypto assets to promptly notify the FDIC and any related state regulator. The FDIC identifies key areas of risk and concern, such as safety and soundness, financial stability, and consumer protection, and directs Covered Institutions to either: (1) provide notification to the FDIC prior to engaging in crypto-related activities; or (2) if currently engaging in such activities, to “promptly” notify the FDIC. 

On March 25, 2022, a multistate coalition of over twenty democratic attorneys general submitted a joint letter to the Consumer Financial Protection Bureau (“CFPB”) asking the Bureau to create a rule regulating providers of Buy-Now-Pay-Later (“BNPL”) financing. The joint letter was submitted in response to the CFPB’s “Notice and Request for Comment Regarding the CFPB’s Inquiry into Buy-Now-Pay-Later Providers.”