In this exciting, innovative, and important area of legal practice, companies domestically and worldwide raise money through an array of structures intended to separate “financial” assets—effectively rights to (or expectations of) payment—from the risks associated with the company. The assets are then dedicated to repayment of capital market securities. Sometimes referred to as structured finance or securitization, this approach creatively brings together many fundamental legal disciplines, including bankruptcy, securities law, corporation law, secured transactions, finance, and tax. Using structured finance as an organizing principle, this course teaches the critical aspects of these disciplines that you are likely to encounter in practice. In addition, the course introduces important commercial financing techniques and concepts, including guarantees, loan agreements, legal opinions, and letters of credit, as well as interest rate and currency swaps and other derivative products. Furthermore, the course addresses how the capital markets work, including the role of rating agencies, and touches on the cross-border and transnational considerations that are essential to modern business transactions. It also shows how structured finance principles can be applied broadly, such as to international project-finance transactions and to microfinance. Finally, the course examines the ethics and efficiencies of “deconstructing” companies in this manner, including the use and possible abuse of special purpose entities and the potential to generate unanticipated consequences, as occurred in the 2007-09 financial crisis.
There is no formal prerequisite. The class will be challenged to identify problems and find real-life, creative solutions. A student without any business-law background should still be able to master the course because the relevant legal principles will be learned and applied along the way, in the same manner that a good practitioner learns. Examination or (with special permission on a first-come, first-served basis) paper.