In an effort to improve market efficiency and to speed settlement, the Loan Syndications and Trading Association (the “LSTA”) is proposing amendments to its trading documents in order to address concerns that market participants are increasingly failing to make timely payment of the “Purchase Price” with respect to their bank loan trade settlements. Although typically only one or two days late, such failures, on a large scale, can prove to be quite costly to loan sellers and disruptive to the market as a whole. The proposal would introduce language into the LSTA Standard Terms and Conditions for its suite of trade confirmations (the “Standard Terms”) that would require tardy loan buyers to pay a “Late Payment Fee.”

The existing Standard Terms provide that the “payor” of a Purchase Price must make such payment on the “Assignment Effective Date,” meaning the date that the administrative agent effects the transfer of the bank loans on its books and records. For various reasons (including back-office limitations initially brought on by the COVID pandemic), payors have increasingly failed to meet this payment deadline and, as a result, their counterparts are facing trade settlement risks and costs that have risen to previously unseen levels.

To this end, the LSTA has suggested modifications to the Standard Terms:

In the event the payor remits the Purchase Price on or after two (2) business days following the Assignment Effective Date, the “payee” will have 30 calendar days from the date upon which it receives the Purchase Price (the “Settlement Date”) to submit an invoice to the payor for the Late Payment Fee, which a payor must promptly pay. Exceptions are for payors who (i) provide a Fed Reference Number or SWIFT Payment Reference Number showing payment before such second business day, or (ii) represent that the payment has been delayed due to government-imposed sanctions.

The Late Payment Fee is to be calculated as follows:

(1) for a “Performing Loan,” the payor may not be entitled to the economic benefit of owning the underlying loan until it actually pays for same. Accordingly, the payee has the right to send an invoice to the payor equal to any interest and ordinary course fees (and, if applicable, adequate protection payments) that accrue from the Assignment Effective Date through but excluding the Settlement Date (the “Late Payment Period”). For simplicity, the payee can calculate the Late Payment Fee using the most recent loan contract all-in interest rate(s) set forth in the applicable funding memorandum.

(2) for a “Non-Performing Loan,” a payee may still demand a Late Payment Fee, but at the “Cost of Carry Rate” for each day of the Late Payment Period. Essentially, until the Purchase Price is received, this mechanism puts the payee in the same position as if the Assignment Effective Date had not occurred. (More importantly, a payee will be able to recoup the Cost of Carry Rate for each day of the Late Payment Period, regardless of whether the “Delay Period” under the trade confirmation had begun.)

(3) for any bank loan otherwise terminated or paid in full prior to settlement of the trade, the payee shall have the right to demand a Late Payment Fee in an amount equal to interest at the Cost of Carry Rate on the Purchase Price, calculated as of the date a payoff letter or proceeds letter was executed and delivered by the parties (the “Payoff Date”), accruing for each day from the Payoff Date through but not including the Settlement Date.

It should be noted that the availability of the Late Payment Fee mechanism is not intended to be an exclusive remedy for loan sellers and that they may be entitled to use any other remedy available under contract or other applicable law with respect to late Purchase Price payments.

For convenience, and to encourage market-wide compliance, the LSTA has circulated sample, user-friendly forms of invoices that can be used by the payee as a means to calculate (and also demand) the Late Payment Fee that is owed. Although it may take a small allocation of operational resources for the payee to generate an invoice, the expected recoupment may be worth the marginal effort. The hope is that the new mechanism will focus the market on the need for timely settlement such that the market reverts back to historical norms.

According to reports, Saks Global Enterprises, a leader in luxury retail, is preparing to file for Chapter 11 bankruptcy protection imminently. Saks houses such iconic brands as Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus. Despite a recent recapitalization, the filing by this iconic company should not be a surprise to those following the industry closely. Retail has continued to face increased costs due to tariffs, inflationary pressures, ballooning consumer debt, and the continued rise of e-commerce competitors (including the upstart Quince). Total debt throughout the Saks enterprise is said to exceed $6 billion. The filing, when it comes, will follow a year-end missed interest payment in respect of certain notes, a sure signal of restructuring activity to come.

For lenders, landlords, suppliers, and other creditors, early preparation for a bankruptcy filing, and taking decisive steps during any bankruptcy case, will be critical to protecting interests and maximizing recoveries.

In bankruptcy, the order of payment to creditors is dictated by the Bankruptcy Code.

  • Senior secured lenders are first in line for payment with respect to their collateral. Saks has a complicated capital structure that includes a secured asset-based lending facility and multiple series of senior secured notes with varying levels of priority. Those lenders will be entitled to the value of their collateral before most other creditor classes are entitled to receive value.
  • Unsecured creditors rank behind secured lenders. These include trade vendors, landlords (with respect to their pre-petition claims), and service providers. To protect their position, unsecured creditors should pay close attention to the bankruptcy docket, including monitoring for critical deadlines for filing proofs of claim. Large creditors may get an opportunity to participate on an official unsecured creditors’ committee which provides a better opportunity to participate in the process. Official committees are entitled to retain their own professionals, the costs of which are paid by the estate.
  • Landlords whose leases may be rejected remain unsecured for lost future rents and should assess their exposure. They must calculate both pre-petition arrears and potential post-rejection damages (subject to certain statutory caps), assembling comprehensive documentation for their claims.
  • Those trade vendors and landlords that continue to provide value following the filing will be treated as administrative claimants and be entitled to payment in full for their post-petition claims (so long as the debtor confirms a plan of reorganization).

A core feature of Chapter 11 is the debtor’s ability to assume or reject executory contracts and unexpired leases. Very generally, these are contracts and leases for which material obligations remain on both sides. Suppliers and service providers should evaluate if their contracts are likely critical for reorganization, and which might be at risk of rejection. If a contract is assumed, the debtor must “cure” all monetary defaults, including past due payments. If rejected, they are left with a general unsecured claim that may be of little value. Landlords must anticipate that Saks will seek to reject underperforming locations to stem losses. When a lease is rejected, landlords should pursue damages claims as may be permitted under Section 502(b)(6) of the Bankruptcy Code. Both landlords and suppliers should maintain open lines of communication with Saks’ and its restructuring professionals to clarify the status of their contracts or leases—whether they are to be assumed, rejected, or renegotiated—and respond quickly to the court-mandated notices.

The Bankruptcy Code provides two unique avenues for enhancing supplier recoveries.

  • Suppliers essential to Saks’ operations may be paid some or all of their pre-petition claims in full to avoid supply chain interruptions. Typically, a debtor will file a “critical vendor” motion early in the case. This is generally reserved for suppliers of strategically important goods or services (and that are willing to continue post-petition trading). Early communication with Saks, including through well-connected counsel, can be an important factor in achieving this preferred status.
  • If a supplier delivered goods to Saks within 20 days prior to the bankruptcy filing, that claim for goods delivered is given administrative priority status under Section 503(b)(9) of the Bankruptcy Code. Note that this does not apply to services. Careful documentation of delivery dates is essential, as is timely filing—delays or mistakes can lead to forfeiture of this priority in payment.

Saks will certainly seek court approval for post-petition (DIP) financing, giving those lenders super-priority status. Press reports indicate that such financing may exceed $1 billion. Likewise, Saks may move rapidly to sell select assets. Aggressive DIP financing terms can greatly impact recoveries. Indeed, broad liens and roll-up features (i.e., rolling up prepetition loans to post-petition status) can dilute claims, especially for unsecured creditors. Stay alert for DIP financing motions. A careful review will certainly uncover much important information, including the path and timeline of the case. The motion will also include budgets, which may provide some color on the proposed claims to be paid during the course of the case.

Suppliers and other creditors should be mindful that, in time, Saks will seek the avoidance of preferential transfers made by the debtor during the 90-days prior to the bankruptcy filing. Very generally, preferences are those payments that are made by the debtor during the 90-days prior to the filing, on account of antecedent debt, while insolvent. There are a number of affirmative defenses, including payments made in the ordinary course of business, to be considered. An early analysis of payments received during this period, and the conduct of the parties with respect thereto, can prevent surprises in the future.

The potential filing of Saks Global Enterprises will represent a major shift in the luxury retail landscape and poses substantial risks—but also opportunities—for various creditor groups. By paying careful attention to the proceedings, landlords, suppliers, and other financial stakeholders can take concrete steps to protect their interests and position themselves for the best possible outcome.

Paul Pollock was recently quoted in a Pensions & Investments article that covers the outlook for private equity firms in 2026 across deals, exits, and fundraising.

The article reads:

Even as deal activity improved in 2025, with nearly $900 billion in deal activity through the third quarter, the private equity ecosystem is largely still unsatisfied, according to Paul Pollock, a partner at Crowell & Moring, a law firm focused on middle-market private equity firms.

“The industry consensus is it has to get better. And the industry’s been saying that now for two years because there really has not been a lot of deal volume in the last couple of years,” Pollock said. “You know, interest rates are too high, multiples have been too high. A lot of it is a hangover for the buyout frenzy that happened immediately after the pandemic.”

Pollock said deal activity was especially weak for lower and middle-market firms in 2025, a trend that could see a reversal next year as interest rates continue to ease, allowing for cheaper debt financing and stronger competition.

Within the middle market, Pollock said he expects AI-enabled healthcare companies to be of interest in 2026, noting that the inclusion of AI in a company’s mandate was of upmost importance to investors.

“We go to a big healthcare conference in Las Vegas every year. Two years ago, of the 15,000 people in all the booths there, maybe 20% had an AI angle. This year, it was basically 100%. So, if you didn’t have an AI angle, nobody’s looking at your company, nobody’s investing.”

Additionally, Pollock forecasted an uptick in middle-market deals within the governmental contractors space.

“Because of everything that’s going on in Washington. There’s a lot of consolidation going on right now, in the defense and aerospace industry,” he said.

Click here to view the article.

Yesterday, FinCEN announced an ongoing enforcement initiative against more than 100 money services businesses (“MSBs”) operating along the Southwest U.S. border. FinCEN says that it reviewed over one million currency transaction reports (“CTRs”) and 87,000 suspicious activity reports (“SARs”) using new data processing techniques to identify potential Bank Secrecy Act (“BSA”) compliance concerns with MSBs there. The agency says this resulted in six FinCEN Notices of Investigation, “dozens” of referrals to the IRS, and 50 compliance outreach letters. An accompanying video from Treasury Secretary Scott Bessent suggests that the initiative is intended to “stop terrorist cartels, drug traffickers, and human smugglers” and to “root out potential cartel-related money laundering from the U.S. financial system.”

This is the latest in a series of actions by FinCEN and other federal agencies against drug cartels and other transnational criminal organizations (“TCOs”), most notably the U.S. State Department’s designation of 14 cartels and TCOs in Mexico and elsewhere in Latin America as “foreign terrorist organizations,” which carries additional risks of criminal and civil liability for third parties that provide support to these entities. FinCEN also has issued two geographic targeting orders (“GTOs”) requiring increased reporting of cash transactions along the Southwest border, though one these has been the subject of an injunction that prevents its application to specific parties. FinCEN notes that it is cooperating with the Homeland Security Task Force and various federal and state agencies on the initiative, and will “seek to impose civil money penalties, pursue civil injunctive actions, issue warning letters, and make referrals to criminal authorities for willful violations of the” BSA.

This is a good time for MSBs operating along the Southwest border to be sure that their anti-money laundering (“AML”) programs are compliant and have been updated to reflect the administration’s many actions with respect to cartels and TCOs. In particular, FinCEN notes the obligation of MSBs to ensure “adequate oversight of agents, branches, and third-party service providers,” such as pay-out partners. Banks, MSBs and other financial institutions more broadly should consider their exposure to MSBs operating along the Southwest border, which can arise in unusual ways through a variety of financial partnerships and counterparties, keeping in mind the elevated risks now present because of the Administration’s designation of several of the larger Mexican cartels as FTOs.

Paul Haskel was recently quoted in an American Lawyer article that explores trends and new approaches in law firm finance. The article discusses various methods of funding utilized by law firms, including debt finance from traditional financial institutions and, more recently, private capital.

Paul commented, “Currently, most firms who have little cash on hand tend to have lines of credit from which to borrow to get them through any given year, and firms in need of immediate capital infusions typically borrow through traditional banks and financial institutions, and increasingly from litigation funders. A lot of law firms typically do borrow to meet their cash needs because they get generally depleted during the course of the year, and they distribute money to their partners in January, and then they have no cash.”

Click here to read the article.

The use of management service organizations (MSOs) in the law firm space is a new and expanding trend. While uncertainties whether MSOs comply with legal ethical rules remain, with only one decision from the Texas Commission on Professional Ethics touching on the issue so far, continued use of MSOs in law firm transactions is expected.

The litigation funder, Burford Capital, expressed its intention to purchase minority stakes in U.S. law firms. And, more recently, AmLaw 50 firm McDermott Will & Schulte has announced that it is in preliminary discussions regarding a potential restructuring in which it would sell a portion of its operations to a third-party investor.

Crowell’s Paul Haskel and Paul Pollock recently published an article in Bloomberg Law exploring these topics and the legal and regulatory hurdles faced by non-professionals seeking ownership and operation of MSOs.

Click here to read the article.

The UK Ministry of Justice has announced an intention to remove English third-party litigation funding from the current requirements of the Damages-Based Agreements Regulations 2013 (“DBA Regulations”) and provide for a different regulatory framework. As we have discussed previously here and here, various forms of uncertainty remain for third parties who wish to fund UK litigation or arbitration while taking a cut of damages awarded, although funders’ return based on multiples of funding has been approved.

The present regime of the DBA Regulations restricts the amount of damages a third party funder may share in, as well as providing certain requirements for how the agreement may be formed. The previous Government set out a basic bill to simply remove third-party litigation funding from the DBA Regulations, but the bill fell after the last election. The Civil Justice Council (“CJC”) subsequently issued a wide-ranging report recommending that removal, and light touch regulation of the industry (largely regarding consumer claim funding and a statutory requirement for independent legal advice to the funded party). It is understood from the Government’s announcement that reform will include at least some of the CJC’s recommendations and therefore a quick revival of a basic exclusionary bill is not expected. Instead, broader legislation to lightly reform regulation of the industry can be expected in the latter half of 2026 at the earliest.

A broad discussion of and comparison between U.S. and UK litigation funding markets can be found here.

On January 1, 2026, the New York LLC Transparency Act is scheduled to take effect, introducing new disclosure requirements for limited liability companies in New York State.

The legislation will have significant implications for all LLCs formed or registered to do business in New York. Furthermore, a proposed amendment awaiting the Governor’s signature would broadly require reporting by LLCs formed or registered in New York, similar to the type of broad beneficial ownership information reporting requirements that the Treasury Department required in rules implementing the federal Corporate Transparency Act, before the Treasury limited these to foreign entities and foreign beneficial owners in a March 2025 interim rule.

Click here to read Crowell’s recent client alert about the Act.

Crowell has been ranked a leading firm by Chambers FinTech in the USA Nationwide Crypto-Asset Disputes category. Crowell’s Anand Sithian has been named a notable practitioner in this area.

According to Chambers, Crowell’s FinTech practice has “strong corporate, financial services and white-collar capabilities to support clients across transactions and evolving regulatory frameworks.”

Chambers FinTech offers comprehensive guidance on the leading lawyers and other professionals in the FinTech industry around the world.

On November 13, 2025, the U.S. Department of the Treasury’s (“Treasury’s”) Financial Crimes Enforcement Network (“FinCEN”) issued a finding (“Finding”) and related notice of proposed rulemaking (“Proposed Rule”) pursuant to Section 311 of the USA PATRIOT Act (“Section 311”), targeting ten Mexico-based gambling establishments (“Gambling Establishments”).  FinCEN found transactions involving the Gambling Establishments to constitute a “class of transactions” of “primary money-laundering concern” for purposes of Section 311.  In particular, FinCEN found that the Gambling Establishments ultimately were controlled by a criminal group that used the establishments to facilitate money laundering for the Sinaloa Cartel. 

Continue Reading Treasury Continues Focus on Cartels: Understanding FinCEN’s Latest Action Restricting Transactions with Certain Mexico-Based Gambling Establishments