Investors fail to show up for vote on CLO expenses cap

Investors in a European CLO have failed to pass a resolution which would have allowed it to meet its administrative expenses. According to an investor notice, only three out of eight classes of investors voted to lift a cap on administrative expenses in the deal, ACA Euro CLO 2007-1. Investors in one tranche rejected the extraordinary resolution, while meetings held for the other classes were unable to pass the proposal because not enough investors showed up on the call.

Next steps for the deal, which is now managed by Avoca Capital, are currently unclear. In the original announcement about the problem – see Failure to pay S&P could lead to CLO bankruptcy, the authors had warned investors that the CLO is at risk of being deemed insolvent under Irish law.