Deloitte snaps up SIV mandates, sidelines rivals

LONDON (Reuters) - Accountancy firm Deloitte DLTE.UL is snapping up most of the receivership mandates for Structured Investment Vehicles (SIVs), sidelining competitors.

Deloitte said on Monday it had been appointed receiver of Golden Key, a SIV set up by Barclays Bank (BARC.L) for Geneva-based asset manager Avendis, with assets holding a nominal value of $1.4 billion.

The accountancy firm is also the receiver for SIVs Cheyne Finance, Whistlejacket and Rhinebridge, missing out on Mainsail II, which was mandated to rival KPMG KPMG.UL.

SIVs are disappearing as an investment option as their model of raising short-term debt to invest in longer-term securities has been caught by the global liquidity squeeze, leaving them without access to funding. The value of their assets -- including U.S. sub-prime loans -- has also plunged.

Trustees often need to appoint a receiver, as a restructuring agreement before receivership needs 100 percent consensus among creditors, something hard to achieve. Instead, the receivers can implement a restructuring that in most cases is likely to leave some of the most junior investors without payment.

"Deloitte were appointed receivers of Cheyne Finance, the first SIV to go into receivership and they did a good job for creditors, so it is not surprising that they have been appointed to other SIVs," said Stephen Peppiatt, a partner at Bingham McCutchen in London.

His law firm is working alongside Deloitte in Golden Key, where they represent the creditors committee. Bingham is also acting for creditors in Whistlejacket.

Accountancy firms PriceWaterhouseCoopers PWC.UL, Ernst & Young ERNY.UL and KPMG see their rival grabbing SIV mandates, which make up the bulk of restructuring cases going on at present.

Restructuring advisers face thin pickings as the much-awaited wave of corporate defaults hasn't started yet and corporate credit payment failures remain at historic lows. Last year's abundance of debt refinancings and covenant-lite loans mean there may be longer to wait before company defaults hit.

"Unfortunately, PriceWaterhouseCoopers is big on the audit market for SIVs, so there's a conflict of interest," said Tony Lomas, restructuring partner at PWC, when asked about his company's lack of SIV restructuring mandates.

KPMG and Ernst & Young were not immediately available for comment.

Deloitte has been picked as receiver in most cases by the Bank of New York, trustee of most SIVs, as some SIV investment contracts were written under U.S. law. Most of the SIVs, however, were based in London, home to an increasing number of hedge funds and global investors over the past few years.

"We won Cheyne as a pitch, maybe because we're the leading securitization firm, we're also specialized in hedge funds and structured products," said Neville Kahn, a restructuring partner at Deloitte who is in charge of most SIV cases.

SIV expertise is vital to win the mandates as they have complex structures and often invest in securitized products -- bonds backed by cash flows from parcels of debt, Khan said.

Cheyne, for example, has as many as 50 institutional investors. Deloitte, which is working on its restructuring, has started to return senior creditors 18 percent of their investment, or $1.3 billion, in cash as a first step, with the rest to be returned after the sale of assets, Khan said.

Mezzanine and junior investors aren't expected to receive anything back, a person familiar with the situation told Reuters.

Knowledge of hedge funds also helps win mandates as they are traditional investors in structured products, where SIVs also invest, Kahn said.

Deloitte has two restructuring partners in the Cayman Islands, home to many hedge funds for offshore and tax reasons, gaining access to their books and structures, Khan said. The firm is expanding its Cayman Islands operation at present, he said.

(Reporting by Elena Moya;editing by Elaine Hardcastle)