Funds & Structured Credit
- So far, most funds have been able to navigate recent liquidity or performance challenges. However, we are identifying a number of funds which are exhibiting signs of stress, particularly across the real estate and distressed debt sectors. As government financial and legal support tapers off in the coming months, we expect to see greater stress amongst funds but further opportunities for others.
- Funds which have reached the end of their lives and are already in wind down are often not providing the best value for shareholders. This is due to the combination of a lack of management resources and expertise to focus on the wind down (given competing priorities from active funds), illiquid or complex assets, and fee structures which are out of step with a wind down scenario. Consequently, we are seeing directors and fund managers taking steps to appoint liquidators at an earlier stage in the wind down. This allows for more innovative fee arrangements to be agreed to and alternative or expedited asset realisation strategies to be followed in order to generate a better return for investors.
- Where funds themselves encounter difficulty we also help GPs, or conversely investors and LPACs, on fund restructuring, M&A, fund extensions or solutions for exiting end of life funds.
- Appointed as provisional liquidators of a Dubai based, Cayman registered c.$5bn emerging market PE fund manager.
- Our primary focus was to stabilise the management platform and either:
- Transition the rights to a third party manager, or;
- Continue with an orderly exit of the portfolio companies and return capital to investors.
- Work focussed on managing 600+ investors, maintaining operational stability across four continents, investigating misconduct allegations made by investors, selling the business, managing assets, chairing the global Investment Committee for key decisions, and downside protection strategy.
Liquidation Outcome Analysis
- Engaged by an African banking Group (headquartered in the BVI) to support restructuring negotiations.
- The Group had entered a standstill agreement with certain of its creditors while looking to dispose of its investments in seven banks across Africa.
- As part of the Group’s negotiations, we were engaged to evaluate the likely liquidation scenario in the event that the Group entered liquidation and assess the likely outcome to creditors in such a scenario.
- Our work involved an assessment of the Group’s complex debt and security structure, the likely impact of any liquidation on the underlying investments and the risk and impact of regulatory intervention.
- This group of companies included a regulated investment fund, fund manager and an independent financial adviser. After concerns were raised by the US regulator regarding potential regulatory breaches, the regulators in the Channel Islands undertook their own reviews and identified further concerns regarding the operation of the fund and recoverability of assets for investors.
- We were approached by the Guernsey Financial Services Commission to act as administration managers of the fund and the manager and liquidator to other group entities.
- We undertook an initial forensic investigation and quickly identified that the fund had not deployed investors’ monies in line with its offering documents. In conjunction with our legal advisers, potential claims were identified against the company’s former auditor. Given the lack of assets in the fund, we secured third party litigation funding to pursue this claim which remains the only prospect of investors recovering any of their investment.
Teneo refers to Teneo Holdings LLC and its subsidiaries and affiliates worldwide. Securities products and services are offered in the United States by Teneo Securities LLC, member of FINRA and SIPC.
Details of the entity providing services, legal and regulatory information in respect of the Teneo entity are also included in our engagement letters.
Specific information relating to our regulated entities which provide services to clients is detailed below:
|Registered Name||Legal Form||Registration Location and Reference||Registered Office||Data Protection||Regulator(s)||Professional Indemnity Insurance|
|Teneo Financial Advisory Limited||Limited Company||England & Wales, 13192958||5th Floor, 6 More London Place, London, SE1 2DA||UK - ZA920639||The Institute of Chartered Accountants in England and Wales (“ICAEW”) C008873136. All insolvency practitioners are licenced by the ICAEW. ICAEW Designated Professional Body licence for a range of investment business activities.||Details of the professional indemnity insurer can be provided on request.|
|Teneo Securities LLC||Limited Liability Company||USA - Delaware||280 Park Avenue, 4th Floor, New York, NY 10017||N/A||Financial Industry Regulatory Authority (FINRA) #151256. Securities and Exchange Commission (SEC).||Details of the professional indemnity insurer can be provided on request.|
Teneo Securities LLC’s Business Continuity Planning
Teneo Securities LLC has developed a Business Continuity Plan (“BCP”) on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our BCP.
The Firm has developed and installed a BCP in the case of any business disruption that causes the Firm to have limited or no communications with its employees or customers. Our plan anticipates two types of business disruptions, internal disruptions which affect only our Firm’s ability to do business (such as a fire in our building) and external disruptions that prevent the operation of securities markets or other firms (such as natural disasters or acts of war).
The Firm intends to stay in business during both internal and external disruptions due to the fact that the Firm employees can conduct Firm related business from alternate off-site physical locations and the Firm maintains an alternate location for the maintenance of its books and records. We anticipate that the Firm will recover from internal business disruptions within 24-48 hours. An outage due to an external business disruption may be longer and is beyond the control of the Firm. However, the Firm will endeavor to resume business as soon as it is possible for the Firm to establish business operations from alternate off-site physical locations.
The Firm’s BCP specifically addresses the following areas related to Firm operations:
- Data back-up and recovery (hard copy and electronic);
- All mission critical systems;
- Procedures to test and determine the Firm’s ability to do business (i.e., financial and operational assessments);
- Alternate communications between customers and the Firm;
- Alternate communications between the Firm and its employees;
- Alternate physical location of employees;
- Critical business constituent, bank, and counter-party impact;
- Regulatory reporting; and
- Communications with regulators.
If you have questions about our business continuity planning, you can contact us (212) 886-1600.