Schulte Roth & Zabel LLP

HMRC has revised its guidance on the application of the targeted anti-avoidance rule (TAAR) to Condition C of the salaried member rules. The new guidance states that HMRC accepts that a “genuine contribution made by [an] individual to the LLP, intended to be enduring and giving rise to real risk” will not trigger the TAAR. The consequence of this change of view by HMRC should be that, in most cases, a “top-up” contribution to the LLP made by an individual in order to ensure that Condition C is failed – such that the individual is not a salaried member – will not be caught by the TAAR. Read more in the attached Alert. Authors: Dan Roman | Nick Fagge

This year’s proxy season is unfolding amid escalating trade tensions that have triggered global market volatility and wiped trillions off stock valuations. As companies grapple with uncertain business models and falling share prices — activist investors are examining their usual playbook. Ele Klein, Schulte’s co-chair of the Global Shareholder Activism Group spoke with Bloomberg on the state of the industry. Market disruption may complicate activists’ ability to make a clear case for change, but it also reveals new vulnerabilities, Ele explained, “The general wisdom is that when the market falls, poorly performing companies are exposed, making them more vulnerable to some extent.” Ele also noted that despite near-term hesitation, activists may see new entry points as downturns expose operational weaknesses — setting the stage for renewed activity once the dust settles.

I'm excited to discuss "Legal and Regulatory Considerations for CLO Market Participants" with my fellow panelists at the CLO Industry Conference 2025, hosted by DealCatalyst in partnership with LSTA, on April 29 at 2pm ET. Register to join me: https://bit.ly/42nfLrr

At Schulte Roth & Zabel, we offer lawyers the opportunity to be part of a collegial, impactful and vibrant environment on the leading edge of the law. Advising some of the most sophisticated private capital clients around the world, our colleagues are committed to a culture that fosters exceptional professional outcomes and personal fulfillment. Join us, and help shape what’s next. Submit your resume and transcript to recruiting@srz.com Learn more about careers at Schulte: https://bit.ly/3Eoud99 #SchulteRecruiting #SummerAssociates #LawStudents

The recent report published by the Joint Committee of the European Supervisory Authorities outlines potential changes to risk retention regulations, specifically targeting third-party originator funds. This development has significantly impacted the European regulatory landscape, prompting CLO managers to make strategic adjustments to align with the proposed changes. While European CLO managers are predominantly affected by these regulatory updates, many US managers also adhere to these rules to attract European investors. Schulte partner Daniel Oshinsky, who represents US middle-market and BSL CLO managers, highlighted the industry's proactive stance, stating "everyone is trying to project where the final regulations will land. But there is definitely a big push in the meantime to update the risk retention provisions and language in offering documents, just to make sure that they're now geared toward what we think is going to come down the pike." Learn more about Schulte's CLO Group at the link in the comments.

Schulte was ranked as a leading manager counsel in both the US Middle Market and US Broadly Syndicated Loan categories in the Q1 2025 9fin CLO league tables. The firm advised on deals totaling more than $7 billion across 17 transactions in the US.   Learn more about the Schulte's CLO Group at the link in the comments.

Schulte represented D. E. Shaw in its agreement with CoStar Group, Inc., pursuant to which CoStar added three new independent directors to its Board of Directors and established a Capital Allocation Committee. The Schulte team advising D. E. Shaw was led by partners Ele Klein, chair of its Global Shareholder Activism Group, and Brandon Gold, and included special counsel Abraham Schwartz and associates Samuel Dayan and John Treon. Learn more about Schulte's Shareholder Activism Group at the link in the comments.

“Private Funds for Distressed Investments”   The expected business disruption of tariffs creates an expectation of more investment opportunities in distressed companies and assets.   Here are a few thoughts on how private funds can be tailored for distressed investing today —   It has been over 15 years since there has been a robust “distressed investments” sector in private investment funds. Back then, the private investment fund world was largely divided into open-end hedge funds (which had to provide liquidity to investors quarterly) and closed-end private equity funds (which were locked into their stated non-distressed equity investment strategies).   Hedge funds had the flexible mandates to pursue distressed investments but the wrong liquidity terms to provide a stable capital base for the necessary investment duration. This became painfully evident when the Global Financial Crisis hit and side pockets and the suspension of investor redemption rights became common. Investors hated it (as did fund managers).   Today, fortuitously, private capital operates in a very evolved market. There are many more fund structure options. And fund investors are much more flexible and open to being patient with their liquidity in order to access medium and long-term opportunities.   In our Fund Counsel toolbox, we can reach for —   ✔ Medium-term Closed-End Funds (what we used to call “PE-lite”) tailored for opportunistic credit and distressed strategies ✔ A variety of Evergreen Funds providing orderly investor liquidity ✔ Hedge Funds (for more liquid distressed trading opportunities and the occasional side pocket investment) ✔ Single investment Co-Investment Vehicles, and ✔ Programmatic (quick to market, repeatable) Co-Investment Platforms.   In each of these structures, fund liquidity and manager compensation can be aligned to the underlying opportunities.   We also have an established, growing and innovative Continuation Fund sector, which provides an additional avenue for investor liquidity that did not exist 15 years ago.   In the coming weeks we will see how our clients decide to use these structures.   In another post, I will discuss how to repurpose an existing private fund for distressed investment opportunities.   #SchultePrivateCredit #DistressedFunds #Tariffs

Schulte recently hosted a GenAI Hackathon for our first and second-year associates. Attendees explored various ways to utilize our new generative Schulte AI Module (SAM) platform and received an overview of GenAI capabilities, including an introduction to design thinking and prompt guidance.   The Hackathon concluded with a competition in which associates utilized SAM to create prompts designed to enhance the efficiency and quality of tasks commonly performed in their practice groups and across the law firm. This was the first in a series of Hackathons that the firm will host for our lawyers and business professionals.   Learn more about careers at Schulte in the link in the comments.

In light of current market volatility, large hedge fund managers should evaluate any potential “Current Reporting” requirements on Form PF tied to certain investment losses, changes to margin, notices of events of default or other factors. Our prior Alert, attached below, describes the 72-hour filing requirements in greater detail. Registered commodity pool operators should also consider a similar National Futures Association reporting requirement under Rule 2-50. Please contact your attorney at Schulte or any of the authors of the Alert with any questions. Authors: Christopher Avellaneda | Marc Elovitz | Kelly Koscuiszka | Anthony Taylor