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A Coming Wave Of Repo Litigation? Four Key Takeaways
March 30, 2020, Covington Alert
Since the last financial crisis, the commercial real estate industry has accumulated vast amounts of debt. By one account, there is currently more than $3.6 trillion in mortgage debt secured by commercial and multi-family residential properties. Much of this debt is held by real estate investment trusts (“REITs”), in the form of commercial mortgage-backed securities (“CMBS”). REITs, in turn, often finance their investments through repurchase (“repo”) agreements, under which they obtain short term loans by selling CMBS to financial institutions and agreeing to repurchase the securities at a higher price on a specified date. The CMBS sold under the repo agreements effectively serves as collateral for the loans. Repo agreements give the lender (the “Buyer”) the right to make margin calls if the value of that collateral drops below a specified level; if the borrower (the “Seller”) fails to meet a margin call, the lender may declare an event of default and sell the collateral.
July 7, 2020, Covington Alert
There were several notable developments in the second quarter of 2020 affecting class actions. The Judicial Panel of Multidistrict Litigation will hold a hearing at the end of July on several requests to consolidate lawsuits related to the COVID-19 pandemic on an industry-wide basis. Courts issued important decisions addressing Article III standing and the ...
April 14, 2020, Covington Alert
The CARES Act established a $349 billion Paycheck Protection Program (“PPP”) that authorizes participating lenders to make federally-guaranteed loans to small businesses as part of Congress’s COVID-19 relief effort. Just days after lenders began accepting PPP applications, lawsuits were already being filed challenging how lenders administer the PPP. In Profiles, ...
February 2020
Covington's class action practice is pleased to launch a multi-part video series with insights on recent class action developments and trends. In our Navigating Class Actions series, partners Sonya Winner, Andrew Ruffino, Emily Henn, Henry Liu, Andrew Soukup, Ashley Simonsen, and Louise Freeman address: Class certifications Emerging issues and privacy ...