We have recently survived the longest government shutdown in U.S. history and narrowly avoided another. Congress passed a full appropriations bill on February 15, 2019, which the president signed. Parts of the appropriations begin to expire as early as October 1, 2019. Here’s a look at how the ABS markets are affected during a government
Buying and selling receivables, the obligor of which is the United States government, requires consideration of the Federal Assignment of Claims Act (“FACA”). As is the case with non-government account debtors, the federal government, in its capacity as an obligor, has the ability (with certain limited exceptions) to set off contractual payments owed by it to a seller of the right to receive such payments, against amounts payable to it by such seller for both (x) damages and related payments caused by such seller’s failure to perform under the applicable contract and (y) any other amounts owing to the government by such seller (including federal tax liability). In the case of non-government obligors, under the terms of the Uniform Commercial Code, a purchaser of the right to receive a contractual payment owing by such obligor may, generally, limit or cut-off the applicable set off rights of the related obligor, by providing a somewhat simple notice to such obligor that the seller has assigned its right to receive such payments. In order for a purchaser to limit the set off rights of the federal government, however, the purchaser must comply with the more complicated requirements of FACA.
As we pack our bags for Las Vegas (and it looks like our winter coats too), we are happy that several Mayer Brown partners will be featured speakers at SFIG Vegas 2019, being held February 24-27, 2019. See the more information at the conference website.
Leading off on Sunday, February 24, 2019, Brad Keck will share his experiences as a practice leader and Hiring Partner, on a panel discussing The Law Firm of the Future: Successfully managing the Modern Practice. Then on Monday, February 25, Carol Hitselberger, a leader not only at Mayer Brown but also in the securitization industry, will participate on a panel entitled, Beyond GSE CRT: Expanding the Use of Credit Risk Transfer; and Matt O’Meara, head of the firm’s Private Credit practice, will moderate the Private Credit Funds: 2019 Market Outlook panel. Credit Funds will be front and center at SFIG this year.