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Creative Financing Solutions to Support Portfolio Companies in Challenging Times: Fund-Level Preferred Equity

Brian Parness — Mon, 06 Apr 2020 13:42:01 +0000

In the wake of COVID-19’s disruption and the attendant uncertainty with respect to future liquidity needs and available funding sources, numerous private equity firms have encouraged their portfolio companies to draw down on their credit lines. With many credit lines fully drawn and, as the current crisis continues to evolve, we expect private equity sponsors […]

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Cayman Islands Added to the EU Blacklist — Private Fund Sponsor Update

Robert Frastai — Thu, 27 Feb 2020 14:46:18 +0000

On February 18, 2020, the EU updated its list of non-cooperative and semi-cooperative jurisdictions, in terms of tax reporting transparency and economic substance standards. Cayman Islands slipped from its prior designation as a semi-cooperative jurisdiction onto the non-cooperative list (the “EU Blacklist”). Key action points for Private Fund Sponsors are: Undertake an existing side letter […]

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Private Equity Fund Acquisition Structures for Buying a Blocker

Noah Beck — Thu, 19 Dec 2019 17:13:41 +0000

It is typical in private equity funds for certain tax-sensitive investors, including U.S. tax exempts and non-U.S. investors, such as sovereign wealth funds, to own their indirect interests in certain types of fund investments through an entity taxable as a U.S. corporation (a so-called “Blocker”), which insulates such investors from the direct obligation to pay […]

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Tax Court Rejects IRS Attempt to Tax Non-U.S. Investor on Sale of Partnership Interest

Robert Frastai — Fri, 28 Jul 2017 15:22:10 +0000

In a recent case, the U.S. Tax Court rejected the IRS’s longstanding and controversial position adopted in a 1991 ruling. In the 1991 ruling, the IRS took the position that a non-U.S. partner’s gain on the sale of an interest in a partnership is treated as income effectively connected with a U.S. trade or business […]

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IRS and Treasury Release Proposed Regulations Addressing Management Fee Waiver Arrangements

Robert Frastai — Tue, 28 Jul 2015 17:31:02 +0000

The US Treasury and the IRS recently released proposed regulations under Section 707 of the Code addressing disguised payments for services. The proposed regulations, when finalized, would limit the use of management fee waiver arrangements. The preamble to the regulations also indicates that profits interests issued in certain instances will not be protected by Rev. […]

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