Assertion Supported AI assessment confidence: 95% certainty 4/5 debate potential 3/5

Majewski: CLO collateral managers cannot be removed absent gross negligence

Tom Majewski · Thomas Majewski – Empty Rooms: Masterclass on CLOs at Eagle Point Credit Management (Capital Allocators, EP. 284) · Dec 1, 2022 · at 1:12:56

Tom Majewski of Eagle Point Credit Management discusses his main investment pet peeve regarding structural terms in CLO collateral management contracts.

0:00 / 0:17exact quote · 17.6s

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“Absent capital C cause gross negligence, you can't remove a collateral manager. You can always sell your security. By and large, the vast majority of CLOs Have these ironclad contracts, which in a private equity fund or a hedge fund would not be tolerated.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

The claim, plainly

In the vast majority of CLOs, collateral manager contracts are ironclad and investors cannot remove a manager absent gross negligence or cause, unlike standard terms in private equity or hedge funds.

a quote alone can be ambiguous, so this restates it with the references and context of the conversation around it resolved. AI-written; the tape below the player is the source.

Assessment

Industry legal standards, rating agency requirements, and indenture surveys confirm that Collateral Management Agreements (CMAs) in broadly syndicated CLOs universally restrict manager removal strictly to defined 'Cause' events (such as gross negligence, fraud, bad faith, or uncured material breach). CLO indentures do not permit no-fault manager removal. In contrast, standard private equity fund governance (such as ILPA Model LPA standards and fund survey benchmarks) commonly incorporates no-fault GP removal provisions, while hedge funds typically permit termination on advance notice or investor capital withdrawal via redemptions.

Market-standard U.S. broadly syndicated CLO indentures and CMAs require a formal Statement of Cause (defined narrowly around gross negligence, fraud, bad faith, insolvency, or uncured material breach) and supermajority votes to remove a collateral manager, completely omitting no-fault removal provisions.
ILPA Principles 3.0 and Model LPA treat no-fault GP removal as a standard limited partner protection, with industry surveys (such as Preqin and ILPA) confirming no-fault removal clauses are standard across private capital funds.
Hedge fund agreements and investment advisory contracts standardly permit termination on notice or investor exit via periodic redemption mechanisms without proving contractual cause.

Checked against

[1] sec.gov [2] sec.gov [3] barings.com [4] pembertonam.com [5] mcdermottlaw.com [6] publicnow.com [7] lawinsider.com [8] scribd.com

CLO manager removal without cause private equity no fault removal "CLO" "collateral manager" removal "cause" "gross negligence" "willful misconduct" CLO collateral management agreement manager removal cause no fault "removal of the collateral manager" "for cause" "without cause" CLO private equity LPA no fault removal GP ILPA survey CLO "removal for cause" majority of controlling class

assessed as of 2026-09-02

This assessment is an AI reading of a public statement, made against the cited references with the confidence shown. It can be wrong. The quote, the tape and the references are all on this page; if something is off, use report an error below. full disclaimer →

Mentioned

CLO collateral manager hedge funds private equity funds

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