Clifford Chance and Lovells close blueprint SIV restructuring

Clifford Chance and Lovells bagged lead roles on the restructuring of the distressed $6bn (£3bn) Cheyne Finance structured investment vehicle (SIV), as it was formerly known.

The restructuring, which completed on 22 July, has been termed a “firesale” by commentators but could act as a blueprint for restructurings of other SIVs that are in similar difficulties.

Cheyne first encountered problems in September 2007, defaulted on its financial covenants and ultimately triggered an insolvency event under the original documentation.

Lovells partners James Doyle and Matthew French (who has since joined UBS) were then drafted in to act for Bank of New York (BoNY) to advise on the restructuring. BoNY appointed Deloitte as receivers.

After it was decided to restructure the Cheyne SIV, Clifford Chance was appointed in November 2007 to advise Goldman Sachs, which acted in a facilitator role.

Clifford Chance London restructuring partner David Steinberg led the team and said that the interesting feature of the deal was that the creditors had the option of whether to realise the SIV’s distressed assets or whether to continue holding a stake in the assets which would be transferred to a new shell company.

Clifford Chance’s core restructuring and insolvency team numbers six partners. On the Cheyne SIV transaction, Steinberg was assisted by capital markets partners Stewart Dunlop in London and Steve Kolyer in New York.

An ad hoc creditors’ committee was also set up by BoNY, for which Linklaters in New York was co-ordinating counsel.

Clifford Chance’s team in London also included capital markets partner Sue Rose and restructuring associate David Towers, as well as capital markets associates Mark Redinger, Yasuko Moriwaki, Sam Dundas, Jennifer Mok and Bonnie Tse. Tax associates Zeke Arlin and Simon Corzberg also assisted on the transaction.