New Temporary Exemptive Relief Relating to Coronavirus Gives BDCs the Ability to Use Adjusted Asset Coverage Calculations and Provides Follow-On Flexibility
On April 8, 2020, the U.S. Securities and Exchange Commission (the “Commission”) issued an
exemptive order (IC Release No. 33837) to business development companies (“BDCs”) granting exemptions from specified provisions of the Investment Company Act of 1940 (the “1940 Act”) and certain rules thereunder (the “Order”). The Order grants BDCs (that elect to rely on it) greater flexibility until December 31, 2020 to (1) issue senior securities and (2) enter into follow-on co-investment transactions, all subject to conditions. In this memorandum, we discuss the key implications of the Order, then provide a more detailed summary of it.