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Synthetic risk, real issues: secondary transfers of credit risk instruments
There are many ways of synthetically transferring risk, including credit default swaps, sub-participations, financial guarantees and insurance related products. Each such method (the relevant contract/instrument being an “Instrument”) gives rise to unique considerations but there are several points that are likely to be relevant whenever the party that has synthetically acquired the risk wishes to transfer its position to a third party. This article considers those relevant issues.
19 March 2024Subrogation and the case of the dissolved co-debtor
The effect of the dissolution of a company, followed by disclaimer by the Crown of leasehold property which passed as bona vacantia, can give rise to difficult issues where the property has been used as security for payment of sums for which another person is also liable, whether jointly and severally or as a surety. This article explores the consideration of the relevant principles in Leon v Kensington Mortgage Company [2023] EWHC 121 (Ch) and offers some reflections on the decision and its implications.
19 March 2024The new FCA Consumer Duty: the interrelationship with common law contractual obligations
The new Consumer Duty is not actionable under s 138D Financial Services and Markets Act 2000. While some existing legislation affecting contracts address the concepts of fairness and good faith similar to those in the Duty, such legislation is of limited application. Might it be possible to use contractual obligations in order to give a right of action? The case law suggests that only the clearest language of incorporation would incorporate the rules underlying the Duty. The Duty will however inform the standards expected under the implied term of care and skill in contracts for financial services.
19 March 2024The Economic Crime (Transparency and Enforcement) Act 2022 and English land registration
The Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA) creates a number of issues for both overseas companies and those dealing with them in conveyances of land, including lenders. This article considers some complications in the regime and the effect of an error on the Land Register.
19 March 2024Credit Suisse, AT1 bonds and taking the BIT between the teeth
Given the huge losses suffered by Additional Tier 1 bondholders, it is unsurprising that lawyers are exploring various potential avenues for investors to obtain redress. This article focuses on investment treaty claims. In the authors’ view, such claims provide a potentially attractive route for investors to recover losses.
19 March 2024Law Commission Report on Digital Assets
In this article the authors discuss two key conclusions and recommendations from the Law Commission’s final Report on Digital Assets.
19 March 2024Regulation of small banks in the UK: lessons learned from SVB UK
This article focusses on the regulatory capital and resolution regime for non-systemic deposit-takers in the UK (for ease, small banks) and potential changes after the resolution of Silicon Valley Bank UK Limited (SVB UK).1 The failure of SVB UK came at an interesting time for prudential regulation of smaller banks as the PRA has been considering the creation of a tailored and proportionate regime. This article considers whether the failure of SVB UK might prompt changes to the PRA’s thinking including making liquidity and concentration risk rules more stringent for banks of all sizes.
19 March 2024Sequana in the Supreme Court: cautious confirmation of the creditor-extension to the director’s duty of loyalty
In this article, Professor Peter Watts KC analyses and critiques the decision of the UK Supreme Court in BTI 2014 LLC v Sequana SA [2022] UKSC 25 (Sequana). This decision confirmed that the directors’ duty to promote the success of their company extends to requiring some consideration of the interests of the general body of the company’s creditors after, but not before, the company becomes insolvent or imminently insolvent. Once a company’s insolvent liquidation or administration becomes inevitable, the interests of creditors become the exclusive focus of the duty of loyalty.
19 March 2024There are known unknowns: how strict is civil liability for breaches of sanctions?
In this article Tom Leary explains how the introduction of sub-s 146(1A) of the Policing and Crime Act 2017 – the introduction of a strict liability regime for breaches of the UK sanctions regime – has created uncertainty that needs to be addressed quickly by Office of Financial Sanctions Implementation.
19 March 2024The missing piece of the puzzle: the adoption of the UNIDROIT Model Law on Factoring
The International Institute for the Unification of Private Law (UNIDROIT) has just adopted the UNIDROIT Model Law on Factoring after three years of negotiations. The UNIDROIT Model Law is the newest addition to the international legislative framework for receivables finance, building upon earlier important instruments developed by both UNIDROIT and UNCITRAL. The UNIDROIT Model Law is well positioned to improve access to credit for micro, small, and medium-sized enterprises involved in global supply chains, in the face of increasingly difficult international economic headwinds.
19 March 2024
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