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Fixed rate loans: tough break (costs) for borrowers
This article considers the recent decision in Farol Holdings Limited & ors v Clydesdale Bank PLC & National Australia Bank Limited [2024] EWHC 593 (Ch) and its likely impact on the landscape of lender/borrower disputes for the recoverability of break costs and the establishment of an unfair relationship.
29 July 2024Lex situs and its discontents: English security over foreign assets
This article examines the distinction between the contractual and proprietary effects of a transaction in the context of English security over foreign assets. In particular, it considers the way in which creditors address, before and after transacting, the ineffectiveness of English security under the lex situs and the important role of equities arising between the contracting parties.
26 July 2024(Un)reasonable endeavours: force majeure clauses and offers of non-contractual performance
Can a party be required to accept an offer of non-contractual performance so as to overcome what would otherwise be a force majeure event? In its recent decision in MUR Shipping BV v RTI Limited , the Supreme Court held that the answer to this question was “no”, finding that the Appellant was not obliged to accept an offer by the Respondent to pay in euros where the contract provided for payment in USD. While the court’s decision may provide parties with greater certainty when it comes to force majeure clauses, this certainty arguably comes at the expense of a “business common sense” approach, and leaves open the possibility that a contract may be suspended or terminated even where a force majeure event could have been overcome by acting reasonably.
26 July 2024IOSCO Leveraged Loans and Collateralized Loan Obligations (CLOs) Good Practices for Consideration: how will this impact leveraged loan documentation?
On 3 June 2024, the International Organization of Securities Commissions (IOSCO) published its final report on Leveraged Loans and Collateralized Loan Obligations (CLOs) Good Practices for Consideration . This guidance follows an extensive market consultation exercise which examined the impact on leveraged loan investors of fewer and looser covenant protections in transaction documentation together with a number of other conduct and transparency concerns within the market. In this article Lee Federman and Adam Wolinsky consider four of the good practice measures which focus on key transaction terms.
26 July 2024Security release filings, a rogue filer and the Economic Crime and Corporate Transparency Act
News broke earlier this year that roughly 800 security release filings, affecting 190 companies, had been fraudulently filed at Companies House, marking the underlying security interests as satisfied when they remained outstanding. New powers given to the Registrar of Companies under the Economic Crime and Corporate Transparency Act 2023 were used to rectify the register. The case shone a spotlight on the vulnerabilities of the system for registering the release of security.
29 June 2024When AI trading bots go rogue, think outside the (black) box
Chatbots have been dominating the headlines with some wildly entertaining reminders of the importance of understanding AI’s limitations. Trading bots deserve some attention too, not least because a lot of trading in financial markets is automated through software programs which could (and in some cases already do) use AI. We have seen cases where deterministic bots have concluded trades in the middle of the night at bizarre prices, or have gone shopping on the dark web and been arrested (confiscated) for doing so. This article swaps out the deterministic bots for AI bots and considers whether conventional legal principles still work.
29 June 2024New originators, are you ready for securitisation?
While securitisations offer numerous benefits, there are a number of important points for originators to consider to facilitate entering into a securitisation transaction and to avoid prolonged legal work further down the line. In this article, we briefly discuss essential points that originators should be aware of and discuss with prospective lenders or arrangers prior to structuring a securitisation.
29 June 2024High Court dismisses unmeritorious “freeman on the land” claims against mortgage lenders
This article considers the recent High Court decision in Stamp and its dismissal of unmeritorious “freeman on the land” claims against mortgage lenders brought by litigants in person. It considers the steps which led to the court’s decision, an analysis of the court’s reasoning and considers the impact it may have for future claims before the court (including the risk of a claimant being in contempt of court).
29 June 2024Strategic secrecy in loan covenant disclosures
Many companies choose not to disclose detailed information about their loan covenants despite regulatory requirements. This article explores the strategic reasons behind this decision, focusing on the potential costs of such disclosure and the implications for financial and regulatory practices. Analysis of a large sample of US loans suggests that companies that likely face tight initial covenants and frequent renegotiations are more likely to withhold these details to avoid negative reactions from other creditors such as trader creditors and bondholders.
29 June 2024Certain key issues in private credit: loan structuring, tax issues and conflict considerations
This article examines certain issues that are particularly relevant for private credit funds as opposed to traditional bank financing, including timing considerations when making debt investments, key points from a lending perspective under investment loan documentation and potential conflicts of interest.
29 June 2024
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