The U.S. Supreme Court declined to hear an appeal of the Second Circuit Court of Appeals’ ruling in Kirschner v. JP Morgan Chase Bank. Last August, the Second Circuit Court of Appeals held in Kirschner that syndicated term loans are not “securities” for purposes of the federal securities law registration requirements. By declining to hear the case, the U.S. Supreme Court allowed the lower court ruling to stand, without the opportunity for further appeal.

The result is a substantial victory for loan market constituents. As we explained in a legal alert on Kirschner last year, this closely watched litigation had the potential to upend the $1.4 trillion syndicated loan industry. A ruling that loans are securities would have introduced high costs and practical complexities (including burdensome disclosure requirements) that would have seriously disrupted syndicated loan dealmaking.

The Loan Syndications & Trading Association, which filed two amicus briefs in the legal proceedings advancing the position that loans are not securities, praised the outcome: “This is a great – and critical – result for our market.”

With this case now over, the loan market maintains its status quo. Deal participants may continue to transact on the understanding that leveraged syndicated term loans are not subject to the securities laws.

The Harris Beach Financial Institutions and Capital Markets team is tracking this and related issues. If you have questions about this subject or related matters, please reach out to attorney Tyler A. O’Reilly at (585) 419-8634 and, attorney Mathew P. Barry at (518) 701-2768 and, or the Harris Beach attorney with whom you most frequently work.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.