ELFA, Akin Gump Co-Author Report on Blind-Spot Risks for Investors
“Thinking outside the box: How to identify potential risks outside of the restricted group,” a report jointly developed by Akin Gump and the European Leveraged Finance Association (ELFA), is now available.
The report highlights the risks that blind spots, caused by the current level of reporting obligations, may pose for investors. Typically, such reporting obligations apply only to entities that are restricted by the covenants, which form part of a group colloquially referred to as being “in the box.” Categories of information “outside of the box” can be immaterial or unrestricted subsidiaries, holding companies, supply chains and material contractual arrangements.
The report draws on recent examples where failure to disclose information has left investors in the dark about what lies “outside of the box” and suggests questions investors should, therefore, ask to help them obtain information that could be material to their decision whether to invest or remain invested.
Corporate partner and report contributor Amy Kennedy said: “This report highlights the potential risks faced by investors in this context and how these may be mitigated. By focussing on recent case studies and suggesting specific questions that investors can request from a company, investors should be well placed to have all salient facts in front of them ahead of making investment decisions.”
To read the full report, click here.