Skip to Main Content
July 10, 2020
Brattle Economists Author Article on the Potential for Collateralized Loan Obligation Litigation amid the COVID-19 Pandemic

Brattle Principal Ioannis Gkatzimas and Associate John Anthony have co-authored an article for Law360 titled “Crisis May Trigger Collateralized Loan Obligation Litigation.” The article explores litigation risks for the various parties involved in collateralized loan obligation (CLO) funds due to the economic downturn triggered by COVID-19.

As the outlook for leveraged loans - the collateral of CLO funds - continues to be uncertain, CLO funds are exposed to litigation risks. Although some risks are similar to the structured finance litigation that followed the 2008 financial crisis, others are unique to the CLO industry, such as unique valuation tests and amendments by managers to CLO contracts. The LIBOR transition expected to take place at the end of 2021 may add an additional layer of complexity and could pose issues for CLOs, as well. If litigation risks related to CLOs materialize due to the unfolding COVID-19 situation, economic and industry experts will be called upon to examine key players’ activities in CLO transactions.

The full article, “Crisis May Trigger Collateralized Loan Obligation Litigation,” is available below.