What the Sanctions Mean for the Funds’ Underwriting Credit Facilities

By Brent Shultz, Todd Cubbage and Robert Bruner (May 23, 2022, 3:15 p.m. EDT) — Russia’s invasion of Ukraine has sparked an unprecedented wave of sanctions against wealthy Russian oligarchs.[1] As the seizure of mega yachts and massive villas around the world grabbed headlines,[2] these oligarchs have substantial investments in hedge funds and private equity funds in the United States and abroad.[3]

This article will examine the impact of a sanctioned investor after admission to a fund, with particular emphasis on the impact of a sanctioned investor on a fund’s underwriting credit facility.

The subscription lines of credit are revolving lines of credit secured by the right to recall the unfunded commitments of investors in these private equity funds.[4]…

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