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Sec v Ripple and MiCAR: the classification of cryptoassets as securities
The SEC v Ripple Labs, Inc. case1 has attracted great interest because of its implications for the qualification of digital assets as securities and, in general, for the future of cryptos in the US, where digital assets are not regulated as such. The EU has adopted a far-reaching regulation of cryptoassets (MiCAR),2 which however, does not apply to cryptoassets that fall under the definition of financial instruments, thus leaving the question open as to the applicable regime. To compare potential outcomes had the case been heard in the EU, this article focuses on the issue of whether and under what conditions cryptoassets can be classified as financial instruments under EU law, and the legal implications of such a classification. This article further analyses the interaction between MiCAR and certain existing national regimes that attract to regulation financial products other than financial instruments. Additionally, a summary of the corresponding regulatory landscape in the UK is provided.
27 October 2024Potential litigation risk in private credit and fund finance: disclosure, consent and valuation
In this article Alex Potts KC identifies the three main areas of litigation, and regulatory enforcement activity, associated with NAV finance in the Cayman Islands.
27 October 2024A new class of debt instruments: carbon credit linked bonds
The genesis and development by IBRD and its structuring banks of bonds with coupons linked to the issuance of carbon credits has been an exciting development in the capital markets and in the natural capital space, though the asset class is not without its challenges. This article explains how this new type of bond works and considers how the asset class can be further developed into a widely used instrument capable of providing large-scale upfront funding to natural capital projects across the globe.
27 October 2024Secured claims in French restructurings: lessons from the 2021 reforms and recent large case precedents
In this article, Jean-François Adelle considers the treatment of secured creditors in in-court restructurings following the 2021 reforms.
27 October 2024Security financial collateral arrangements and the crystallisation of floating charges
In this article Jonathan Haines considers whether the crystallisation of a floating charge means that it can qualify retrospectively under the Financial Collateral Arrangements (No. 2) Regulations 2003 (2003/3226) and the impact of that on other creditors.
27 October 2024Blended finance: funding sustainable development with public and private funding
The concept of blended finance is not new. But it is being applied beyond its traditional development and impact finance roots as a way to mobilise scaled private capital flows for the purposes of achieving sustainable development goals. In this article, we look at the different definitions of “blended finance” and how blended finance can be used to combine public and private capital for climate, nature and broad sustainable development purposes.
27 October 2024Alternate realities: transactional and economic reality in APP fraud and unjust enrichment
Two recent conflicting judgments have considered whether, for the purposes of a claim in unjust enrichment against a receiving bank, a transfer of funds following an authorised push payment fraud is made “at the expense of the claimant”. In this article we consider the application of the concepts of “transactional reality” and “economic reality” in this inquiry.
27 October 2024Market abuse and restitution orders: challenges for FCA policy
This article addresses the potential for the Financial Conduct Authority’s use of its powers to order restitution for market abuse against a listed or publicly traded company/issuer, to undermine the liability regime for such companies to their investors set out elsewhere in the Financial Services and Markets Act 2000 (FSMA). It suggests that the proportionate issuer liability regime which was adopted, after extensive consultation, between 2006 and 2010, and is now contained in s 90A and Sch 10A FSMA, is a key aspect of UK public market competitiveness and that restitution should not become a substitute means for investors to recover losses for disclosure breaches from the issuer, absent fraud.
27 October 2024Country risk in unprecedented times: a precedent for cross-border loan documentation?
While country risk cannot be avoided in cross-border transactions entirely, it can be effectively mitigated through careful transaction structuring and tailored contractual protections. Market standard loan agreements will include a number of exit rights and cost recovery provisions which may be helpful to a lender exposed to country risk and can be negotiated to meet the needs of the particular transaction. It is important to strike a balance between the effective management of country risk for lenders, and a contractual framework that provides the borrower with the required economics and flexibility to operate with certainty.
30 September 2024The rise of NAV financings: is an equity contribution really “equity”?
Leveraged buyouts have traditionally been funded principally by debt secured against the collateral of the asset being acquired (typically borrowed by the acquisition special purpose vehicle, onward lent, and secured against the underlying collateral), combined with a sponsor equity commitment. To this, debt and equity commitment letters are commonplace within acquisition processes, and there is a clear expectation – both from sellers, and the acquisition financing provider – that the sponsor is committing true equity into the structure. However, as rising costs of capital have made investment returns more challenging, sponsors have looked to more creative ways to assist in levering their equity contribution, including by way of the incurrence of NAV financings. NAV financings used in this manner can mask the underlying nature of the equity commitment and, in a downside scenario, potentially lead to significantly more complex, and uncertain, workouts.
30 September 2024
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