On May 22, 2020, the U.S. District Court for the Southern
District of New York ruled in Kirschner v. J.P. Morgan.
The court held that a syndicated term loan is not a
"security" under state securities laws. Had the court
found that loans are securities, such a ruling would have had
profound consequences on the leveraged loan market. This
Alert provides a brief overview of the court's holding
and details the implications on the banking and financial services
industry.
Background
The case arose out of a $1.8 billion loan provided in April 2014
by J.P. Morgan Chase Bank, N.A. and a syndicate of other lenders to
Millennium Laboratories LLC. Shortly after closing, the lenders
sold respective portions of their interest in the term loan to
several institutional investors.
