COVID-19

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By Tom Evans, David Walker, Daniel Smith, Aisling Billington, and Catherine Campbell

The location of the data is not sufficient to avoid a disclosure order.

When it comes to personal devices, people increasingly communicate across multiple platforms, often in an informal and unguarded manner. However, high levels of litigation driven by the COVID-19 pandemic (including insolvency and restructuring litigation), the recent M&A boom (including shareholder disputes and other transactional litigation), and the rise of remote/hybrid work mean that PE firms must remain alert to the risk of personal device communications being disclosed in litigation.

As seen in recent cases, the English courts place value in contemporaneous written evidence, and take a pragmatic and targeted approach to disclosure. While English courts are mindful of the privacy rights of individuals, they recognise that employees conduct work on personal devices and non-proprietary third-party apps.

However, the location of the data is not sufficient to avoid a disclosure order, and PE firms should consider how to best protect themselves.

Mr Justice Hacon finds that procedures for applying for permission to appeal are not altered by the COVID-19 Protocol.

 By Oliver E. Browne

In Claydon v. Mzuri,[1] Mr Justice Hacon of the High Court has found that the COVID-19 Protocol does not alter the procedure for appeal applications if a decision is handed down remotely and the parties do not attend. Notably, the Judge clarified that the remote nature of the relevant hearings and the handing down of the trial judgment had no bearing on the proper approach to be followed in the context of seeking permission to appeal.

Italian Securities Commission returns to ordinary reporting requirements for listed issuers.

By Antonio Coletti, Isabella Porchia, Guido Bartolomei, and Marta Negro

The Italian Securities Commission (CONSOB), by press release dated April 12, 2021, announced its decision to end the more stringent reporting requirements originally introduced on April 9, 2020, as a response to the impact of the COVID-19 pandemic on financial markets. While the more stringent requirements were renewed in three month increments, they will not be renewed after April 13, 2021. Starting April 14, investors will be required to comply with the pre-pandemic reporting requirements.

By Rob Moulton, Nicola Higgs, Anne Mainwaring, Becky Critchley, and Anna Lewis-Martinez

The latest edition of our Private Bank Briefing provides a roundup of legal and compliance issues impacting private banks and their clients from Q1 2021.

In this edition, we cover some of the key regulatory announcements relating to MiFID II and the impact of COVID-19, the latest on Brexit, the FCA’s announcement on the dates for cessation of LIBOR benchmark settings, and the FCA’s…

In the 2021 edition of IFLR’s M&A Report, Latham & Watkins considers key developments likely to impact M&A in 2021, and how dealmaking is likely to progress in light of these developments.

By Nick Cline, Robbie McLaren, Douglas Abernethy, Richard Butterwick, and Catherine Campbell

If 2020 was the year that COVID-19 precipitated extraordinary government intervention and regulation of our lives, 2021 looks set to be the year that regulatory interventions in M&A precipitate changes to…

In a changing social landscape, PE firms should conduct corporate culture due diligence while also ensuring the implementation of robust complaints procedures.

By David Berman, Sarah Gadd, Joe Farrell, Nell Perks, David Walker, Tom Evans, and Catherine Campbell

As global businesses react to the pandemic and social movements, PE firms should remain watchful for whistleblowing issues involving both portfolio and target companies. We anticipate a significant increase in the number of employees asserting whistleblower status — a development that may prove costly to address, even if claims are without merit.

There is now more to blow the whistle about, including new workplace health and safety issues arising from COVID-19, misuse of government furlough schemes, and events highlighted by movements like #BLM and #MeToo. This is in addition to long-standing whistleblower issues, such as accounting irregularities, anticompetitive behaviour, and bribery and corruption. Further, in an economic environment where redundancies are increasing and the new jobs market is depressed, employees are more likely to resist termination.

Innovative asset-based lending is on the rise as a means of attracting new lenders while maintaining the strategic support of existing creditors.

By Francesco Lione, David Walker, Tom Evans, and Catherine Campbell

Raising fresh capital for portfolio companies in times of financial stress is always a delicate balancing act between attracting new lenders and maintaining the strategic support of existing creditors. The almost instantaneous halt in cash flows and scramble for new capital injections precipitated by the COVID-19 pandemic has significantly changed traditional approaches to collateral — giving rise to new financing opportunities for sponsor-backed deals and businesses. Regardless of debt market buoyancy, these new financing techniques are here to stay, having demonstrated value in overcoming creditor scepticism during times of economic uncertainty and bringing a new way to increase leverage.

More stringent reporting obligations regarding relevant shareholdings and investment objectives for Italian-listed issuers will continue until 13 April 2021.

By Antonio Coletti, Guido Bartolomei, Marta Negro, and Isabella Porchia

On 13 January 2021, the Italian Securities Commission (CONSOB) adopted Resolution 21672 (the Resolution), further extending for three months the more stringent reporting requirements for relevant shareholdings and investment objectives in certain Italian-listed issuers with high current market value and/or spread ownership structure. The more stringent reporting requirements will now end on 13 April 2021. The Resolution extends the provisions of 9 April 2020, which were later extended until 13 January 2021

The more stringent reporting obligations for certain Italian-listed issuers will continue until January 13, 2021.

By Antonio Coletti, Isabella Porchia, Guido Bartolomei, and Marta Negro

The Italian Securities Commission (CONSOB) has adopted Resolution 21525, extending for a period of three months — from October 13, 2020, to January 13, 2021 — the provisions of Resolutions 21326 and 21327 of April 9, 2020, as later extended by Resolution 21434 of July 8, 2020 (the Previous Resolutions). The provisions imposed stricter reporting obligations of relevant shareholdings in certain Italian-listed issuers that were selected taking into account their high current market value and/or spread ownership structure (see updated lists, available only in Italian, set out in CONSOB Decisions 39/2020 and 40/2020).

CONSOB reported that this further extension was motivated by the continuing uncertainty about the evolution of the economic and financial situation generated by the COVID-19 pandemic.

Despite practical challenges, earnouts are a tool that PE buyers should increasingly consider to reconcile differences and get deals done.

By Alexander Benedetti, Giancarlo D’Ambrosio, Sebastian Pauls, Laura Kichenside, Catherine Campbell, Tom Evans, and David Walker

The use of earnouts, though historically disliked by PE buyers, is increasing across Europe. Earnouts can provide a way to bridge valuation gaps, a common need given frothy valuations pre-COVID-19, and a more frequently encountered issue during H1 2020. According to the forthcoming seventh edition of the Latham & Watkins Private Equity Market Study that examined deals signed or closed between July 2018 and June 2020, 18% of deals featured an earnout, compared to 16% and 14% in the 2018 and 2019 editions respectively. While the use of earnouts has challenges for PE dealmakers, earnouts have enabled parties to reconcile differences and get deals done, making them a tool that PE buyers may become more willing to accommodate in the year ahead, particularly given the uncertainties for many businesses caused by COVID-19.