Financing and Liquidity

Skadden, Arps, Slate, Meagher & Flom LLP

Publications

Amending a Debt Instrument Trading at a Discount: Beware of Tax Consequences
May 29, 2020

In light of the ongoing economic uncertainty, many companies are considering amending their credit agreements and other debt instruments, either to minimize the likelihood of breaching financial covenants or to rework payment schedules. However, companies should keep in mind that amending a debt instrument which is trading at a discount to par in the secondary market can result in cancellation of indebtedness income that is currently includible for tax purposes without any associated cash — even in situations where the principal amount of the debt remains unchanged.

COVID-19: Germany Update — Corporate Liquidity Issues in the Time of the Coronavirus Crisis
April 14, 2020

This article focuses on financing issues and opportunities for German companies during the coronavirus pandemic, specifically in respect of existing loans, new loans supported by KfW (the German state-owned development bank) and equity measures of the German Economic Stabilization Fund (Wirtschaftsstabilisierungsfonds).

SEC Relief Permits BDCs To Incur Additional Leverage and Co-Invest With Affiliated Private Funds
April 13, 2020

The U.S. Securities and Exchange Commission has issued an order enabling business development companies that meet certain conditions to borrow under their existing credit agreements and issue new debt and preferred stock. The order also makes it easier for those companies and their affiliated private funds to make follow-on investments in portfolio companies. The temporary relief is available only through December 31, 2020.

NYSE Partial Waiver of Shareholder Approval Rules
April 10, 2020

On April 6, 2020, the New York Stock Exchange filed an immediately effective rule change with the Securities and Exchange Commission that waives the application of certain shareholder approval requirements through June 30, 2020. The change removes impediments to raising capital in private offerings and increases companies’ ability to access liquidity directly from a few significant investors for a limited time. The waivers temporarily align the NYSE’s and Nasdaq's shareholder approval exceptions for certain private financings and related party transactions.

Debt Repurchasing Considerations in an Uncertain Market 
April 8, 2020

This mailing details the legal considerations for companies considering making debt repurchases during the COVID-19 pandemic.

Considerations for Commercial Mortgage REITs in a Market Driven by COVID-19
April 3, 2020

Given the economic and capital markets impacts resulting from the U.S. government’s response to the COVID-19 outbreak, it appears inevitable that many commercial mortgage REITs will need to develop strategies to modify their capital structures, finance their operations and engage with distressed borrowers. This client alert highlights key tax issues that commercial mortgage REITs should bear in mind as they develop those strategies

COVID-19: Russia Update
April 3, 2020

In our first update on the impact of COVID‑19 in relation to the Russian market, we consider contract implications, changes to Russian corporate and securities laws, recent response measures adopted by the Russian government and general trends.

COVID-19 Entertainment Update: Guidance for Entertainment Companies
March 27, 2020

As the coronavirus/COVID-19 pandemic continues to have major repercussions across the entertainment industry, companies are finding ways to navigate the storm. There is no single playbook for mitigating the impact of the crisis but rather a wide range of strategies and approaches for boards and management teams to consider.

Oil Price War and Challenging Debt Markets: Tax Risks and Strategies for Upstream and Midstream Companies
March 23, 2020

As many upstream and midstream companies grapple with the prospect of severe liquidity constraints due to the rapid deterioration of the commodity and debt capital markets, borrowers evaluating approaches to capital structure management should consider the current tax landscape before embarking on a plan, particularly if that plan involves transactions such as a debt modification, sale/leaseback transactions involving real estate investment trusts, joint ventures and volumetric production payments. Distressed companies will need to carefully consider the significant consequences outlined here as they reevaluate their capital structures.

REIT and RIC Cash Management Strategies for Uncertain Times
March 19, 2020

Despite developments in the equity capital markets stemming from the pandemic-related economic downturn, REITs and RICs looking to preserve liquidity still have a number of options available to them, including deferring quarterly distributions, satisfying distribution requirements with stock-based dividends, and pursuing various types of taxable and tax-deferred asset dispositions. Entities should consider that the IRS currently allows any publicly traded REIT or RIC to take advantage of certain of these cash management strategies without obtaining a private letter ruling.

Coronavirus/COVID-19 Update — Liquidity Issues and Access to Funding
March 18, 2020

Webinar

COVID-19: Assessing Decisions on Performance and Exposure in Commercial Agreements and Credit Facilities
March 23, 2020

On March 23, Skadden presented a webinar titled “COVID-19: Assessing Decisions on Performance and Exposure in Commercial Agreements and Credit Facilities.” The program focused on the factors companies must consider regarding their and their counterparties’ performance under many different types of agreements as the COVID-19 virus continues to affect the world. Speakers included Skadden partners Julie BédardJohn BeisnerSeth Jacobson and Scott Musoff, as well as Deloitte partners Kirk Blair and Bryan Foster.

See all our COVID-19 publications and webinars.

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