MVA White Collar Defense, Investigations, and Regulatory Advice Blog

Following up on our most recent blog post on developments regarding the enforcement date for the Corporate transparency Act (“CTA”), on December 26, 2024, the Fifth Circuit Panel that will ultimately be handling the merits of the appeal from the District Court issued an order vacating another order by a different Fifth Circuit panel on December 23, 2024 that had stayed the U.S. District Court for the Eastern District of Texas’ nationwide injunction on the beneficial ownership reporting obligations under the CTA. The aim of the rapid reversal is to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.

As discussed in our prior blog post, on December 3, 2024, the U.S. District Court for the Eastern District of Texas (“District Court”) issued an order preliminarily enjoining enforcement of the Corporate Transparency Act and the associated beneficial ownership information reporting rules (the “CTA”) nationwide (the “preliminary injunction”).

On December 3, the U.S. District Court for the Eastern District of Texas (“Court”) entered a sweeping order enjoining enforcement of the Corporate Transparency Act and the associated beneficial ownership information reporting rules (the “CTA”) nationwide. The immediate effect: notwithstanding the CTA’s stated reporting deadline of December 31, 2024, no entity is currently required to file with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) information about itself, its owners or the persons otherwise controlling the entity.

With the amount of commercial real estate loans scheduled for maturity over the next several years expected to increase significantly, there is accompanying heightened risk that some borrowers may be unable to replace their maturing debt with new debt under reasonable terms and prevailing market conditions (refinance risk).  On October 3, 2024, the Office of the Comptroller of the Currency (“OCC”) issued OCC Bulletin 2024-29, which provides guidance to banks in the management of credit risk associated with refinancing commercial loans.  The bulletin, which applies to all banks with commercial loan portfolios, outlines that refinance risk affects both individual loan transactions and loan portfolios and can be driven by both external and borrower-specific factors. The bulletin highlights the need for banks to have related risk management processes that are appropriate for their size, complexity, risk profile and loan types.