Managing Fraud and Enforcement Risk in Private Lending Agreements: Drafting, Forensics, and Privilege

This CLE course will examine how the U.S. legal system is responding to private credit market transparency concerns and the potential for regulatory and prosecutorial response. Our faculty will outline enhanced vigilance standards across the private credit transaction lifecycle to help detect and prevent fraud risk. Time will be spent highlighting how third-party forensic experts can support efforts to mitigate fraud potential and with fraud recovery.

After a decade of growth, private credit lending has become a multi-trillion-dollar industry. Non-bank financial institutions such as private equity firms and asset managers continue to participate in these credit transactions because of attractive interest rates and higher investment returns. Borrowers continue to rely on private lenders over traditional commercial banks for their greater certainty, quicker execution, and flexibility.

As often happens during exponential growth, deal makers and regulators are playing catch-up in their effort to find a balanced approach to promote healthy activity while minimizing the risk of broader market disruptions. Until now, regulators and enforcement staff have largely taken a hands-off approach, but recent fraud cases such as Tricolor Auto Group and First Brands Group have made headlines. These cases may mark an inflection point, prompting private equity investors, asset managers, and counsel to reevaluate existing deals for fraud and to strengthen diligence and lending agreement provisions going forward.

During this course our esteemed faculty will examine how the U.S. legal system is responding to opacity in the private credit market, analyze domestic credit market stress, as well as potential regulatory and prosecutorial responses. The faculty will also evaluate fiduciary vigilance standards for private credit transactions from negotiation and due diligence to agreement drafting and closing. The faculty will also spotlight how third-party forensic experts can help prevent, detect, and recover from fraud.

Listen as our faculty examines current market conditions, the likelihood of future government intervention, and how to prepare for future inquiries with privilege in mind. Learn how to negotiate and draft enhanced covenants and provisions to mitigate fraud risk in future lending transactions, and how to get ahead of deals that may be turning into bad ones.