Advice for Businesses in Dealing with the Expanding Coronavirus Events
Issues for Private Fund Managers in the Age of COVID-19
By Ira Kustin
The spread of the COVID-19 virus and related effects on the market present unique challenges for managers of private investment funds including hedge, private equity and credit funds. Now is the time for these managers to review their fund's governing documents to prepare for liquidity pressure, ensure ongoing compliance with their obligations to the fund and investors, and prepare for future contingencies. Private fund managers should also be ready to address investor inquiries, ongoing regulatory compliance, and portfolio management issues.
Private fund managers should review their funds’ offering and governing documents in light of the market disruption relating to COVID-19.
These managers should familiarize themselves with the tools at their disposal for dealing with liquidity pressure or LP defaults.
Provisions regarding gates, suspension of withdrawals/redemptions, and special distribution structures will be of key importance.
Managers of closed-end funds also face special challenges.