Securitizations and Structured Finance
Practice Leader: Richard P. Eckman
The Securitization and Structured Finance Practice Group of Pepper Hamilton LLP draws lawyers from the firm's corporate and securities, banking and financial services, real estate, taxation and bankruptcy practice groups.
Working as a team, this group has substantial experience representing clients, including issuers and corporate trustees, in complex securitization transactions and structured financings, including public offerings and private placements. We have represented clients in numerous asset-backed transactions, including securitizations of student loans, credit card and trade receivables, consumer loans, small business loans, consumer auto leases, equipment leases, cash servicing for nonbank automated teller machines, government receivables, noninsured medical procedure receivables, and mortgages and mortgage servicing rights.
We also have significant experience in advising clients in connection with trust originated preferred securities offerings, commercial paper conduit financings and other structured finance transactions, including collateralized bond obligation offerings and off-balance sheet financing of mutual fund “B share” arrangements, and the use of Delaware Business Trusts.
Engagements of our lawyers in this area include representing the following:
- one of the largest credit card issuers in the country in the first Master Trust credit card securitization in the country involving a series of multi-billion dollar public transactions, which included the drafting of the disclosure documents, negotiating opinions with the rating agencies and advising the parties on credit enhancement issues including the use of letters of credit, senior subordinated structures and the use of cash collateral accounts
- a public REIT in connection with the creation of a conduit for the issuance of up to $5 billion of commercial paper backed by private-label mortgage backed securities aquired by the conduit under repurchase agreements with a special purpose subsidiary of the REIT
- a large money-center bank in connection with various international tax-sensitive structured financings with other financial instiutions
- Bank of New York (Delaware) in a $400 million securitization of a portion of its credit card portfolio using a senior subordinated structure
- First Omni Bank in a $400 million securitization of a portion of its credit card portfolio using a senior subordinated structure
- First Union National Bank as trustee of a pooling and servicing agreement involving Charming Shoppes' securitization of the credit card receivables of Spirit of America National Bank, a national banking affiliate, in its sale to a receivables conduit of Citicorp, a public offering, and a private placement
- a Fortune 500 company in a $150 million securitization of trade receivables to a conduit sponsored by Wood Gundy/Canadian Imperial Bank Corporation
- a private medical receivables finance company in securitization of its receivables in a private placement
- Bank One, N.A. and Bank One Delaware, Inc. as trustees in more than 100 trust originated preferred offerings (known sometimes as TOPrs), as well as Fortune 500 companies as issuers in these popular structured finance vehicles
- a cash services management company in securitization of cash used in nonbank automated teller machines
- a large, international investment management firm (which acted as sponsor and investment manager) and the issuers (two special purpose entities) in a collateralized bond obligation offering. This structured financing involved the issuance of $199 million of Senior Notes, $25.5 million of Senior Subordinated Notes and $20 million of limited partnership interests in a private placement to institutional investors. The proceeds of that transaction were utilized to purchase a portfolio of high-yield corporate bonds selected and managed by the investment manager.
- the distributor of a mutual fund in a structured financing of the mutual fund's "B share" arrangements. The financing plan involves (i) the sale to a special purpose corporation of the rights to the distributor’s future cash flows from distribution fees and deferred commission income generated from the sale of the mutual fund's Class B shares, with continuing servicing and accounting of the receivables by the distributor, and (ii) borrowing by the special purpose corporation under a commercial line of credit (secured by the receivables) to pay the purchase price.
- various bank holding companies in offerings of trust-preferred securities
- a mortgage lender (which acted as sponsor and servicer) and its subsidiaries in registering a $300 million securitization of mortgage loans using a REMIC structure. In the first offering under the shelf registration, $102,841,606 Mortgage Pass-Through Certificates representing beneficial interests in a pool of mortgage loans were sold by a special purpose corporation in an underwritten public offering
- a federal agency as issuer of over $5 billion of securities backed by government-guaranteed obligations of participants in community development and venture capital programs
- the portfolio manager (a joint venture between a registered investment adviser and a leading independent research firm) in a U.S./offshore collateralized bond obligation offering of $300 million (approximate aggregate amount) of senior secured floating rate notes, senior secured floating rate revolving notes, second priority fixed rate notes, and subordinated notes of an offshore entity, the proceeds of which are invested in high-yield U.S. and foreign corporate debt securities
- a bank holding company, as a purchaser of several tranches of notes issued by a special purpose trust and collateralized by a pool of trust preferred securities
- the collateral manager in a U.S./offshore collateralized bond obligations offering of $155 million (approximate aggregate amount) senior and subordinated floating rate notes, subordinated fixed income notes, and preference shares, the proceeds of which are invested in high-yield U.S. and foreign corporate debt securities
- in separate transactions, two large multinational corporations in the securitization of trade receivables to a conduit sponsored by Citicorp North America, Inc.
- a credit risk insurance provider in a variety of structured financing and securitization transactions, in which the insurer provides coverage for shortfalls in cashflow in the underlying portfolio of assets including as a result of excessive defaults in the underlying assets
- PAMEX Funding, Inc. in a $88,751,000 securitization of mortgage loans using a REMIC structure. The securitization resulted in the issuance of Mortgage Backed Notes and Residual Interest Certificates.