Since the credit crisis, investment/collateral managers have been challenged by the disposition of assets that are effectively valued as worthless and/or are illiquid. Especially in CLO 1.0 transactions, the documentation is less flexible and remedies or options, such as sale of assets to existing investors or even abandonment of worthless assets, is not available. This issue becomes particularly significant at the end of a transaction as it can prevent an orderly wind down and voluntary liquidation of SPVs and fund structures.
Given the administrative and cost issues this creates, Maples Fiduciary established an entity called FLP Investments Ltd. some time ago to take worthless and illiquid assets (subject to certain criteria being met and minimal fees being paid, transfer documentation being executed and basic terms and conditions being agreed for the sale).
Whilst this solution has proved popular and been utilised regularly, historically its use has been limited to securities that were held in definitive registered form. However, Maples Fiduciary is now pleased to announce it has established a custodial account with an industry partner to offer a solution for assets that are also held in global form.
The ability to take such assets, even when held in global form, together with our easy-to-use precedent documentation and our bespoke approach to dealing with tricky issues, such as residual claims, provides managers and other parties with a significantly enhanced solution to deal with illiquid and worthless assets where deals need to unwind and/or terminate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.