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Does payment into a customer’s bank account enrich the bank?
The long-standing controversy of whether a bank (or other agent) is “enriched” by receiving a payment into its customer’s account, where the receipt gives rise to a corresponding liability to the customer, should arguably now be treated as settled at High Court level, but would benefit from appellate consideration.
12 January 2025The law on undisclosed commissions: ripe for review by the Supreme Court
The judgment in the conjoined appeals of: (i) Johnson v FirstRand Bank Limited (London Branch) T/A Motonovo Finance; (ii) Wrench v FirstRand Bank Limited; and (iii) Hopcraft v Close Brothers Ltd [2024] EWCA Civ 1282 is the most recent in a series of Court of Appeal decisions on secret and half-secret commissions paid in a consumer context. The appeals considered claims regarding the payment by lenders of commission to car dealers for arranging claimants’ hire-purchase agreements. The judgment sent shock waves through the motor finance industry, triggering falls in share prices and withdrawals from the motor finance market, with warnings that the decision may lead to a wave of consumer claims similar to the PPI scandal. Two aspects of the judgment that have caused concern are the decision that the commission was “secret” when the terms and conditions of the hire-purchase agreement said it might be paid, and the finding that car dealers, in selecting finance from a panel of lenders for their customers, are acting under a fiduciary duty to their customers.
12 January 2025Ending LIBOR: a landmark ruling on Tough Legacy contracts
The High Court case Standard Chartered PLC v Guaranty Nominees Ltd [2024] EWHC 2605 (Comm) and others addressed “Tough Legacy” contracts, which referenced LIBOR but could not be amended consensually. Standard Chartered sought a ruling on substituting LIBOR with a similar rate after synthetic LIBOR stopped in 2024. In a strong and well-reasoned judgment, the two-judge court ruled that an implied term was needed for business efficacy. It endorsed CME Term SOFR with a spread adjustment as an objective alternative to LIBOR, enhancing contractual certainty for future cases. This decision underscores the Financial Markets Test Case Scheme’s value in resolving key financial uncertainties.
12 January 2025The Building Safety Act: issues for lenders
Since the Building Safety Act 2022 gained Royal Assent on 28 April 2022, there has been extensive commentary and litigation on the many issues which arise between landlords, leaseholders, and developers. Less so, in the case of lenders financing affected developments and/or investments. This article reflects on some considerations which can arise, in particular in the context of the higher-risk building management requirements in Pt 4, and the so-called “leaseholder protections” in Pt 5.
12 January 2025The cost of further assurance
When a further assurance clause (FAC) provides that one party to a loan agreement is to take steps “at the cost” of one of the other parties, sundry questions may arise as to when that debt falls due; whether the debt is subordinated to that owed to other lenders; how it is to be quantified; and how it might be recovered. This article considers those issues where a mezzanine lender has assumed an obligation to provide further assistance or assurance at the request of a senior lender, on the basis that the costs are to be borne by the senior lender or the borrower.
12 January 2025Cineworld: contracting out of a restructuring plan
Can you contract out of being included in a restructuring plan? In English law, that is an issue of considerable interest to borrowers and creditors when considering consensual compromises. It raises important questions about the policy of insolvency and restructuring law, particularly in the context of restructuring plans.
That issue arose in UK Commercial Property Finance Holdings Limited v Cine-UK Limited & Anor [2024] EWHC 2475 (Ch). The court had to grapple with the logic and limits of negative covenants in the zone of Pt 26A of the Companies Act (Pt 26A). Not all of those issues were resolved by the court. Importantly, the court opted not to grasp the nettle and consider whether a negative covenant not to be included in a restructuring plan is enforceable at all.
Enforcement against Indian obligors: key considerations
The Indian legal framework provides various enforcement options to creditors for debt recovery vis-à-vis obligors. The availability and exercise of these options depend on the nature of the obligations involved, and the legal status of creditors and debtors, and therefore is complex. While each option provides an effective framework, they are also fraught with their respective advantages and disadvantages.
12 January 2025“Green revolution”? Solicitors’ duties in the light of risks relating to climate change
In this article the authors consider the impact on solicitors engaged in banking and finance transactions of the Law Society’s recent Guidance on the Impact of Climate Change on Solicitors . How is growing awareness of the potential risks associated with climate change affecting the nature and content of solicitors’ duties – and potential liabilities – to their clients?
12 January 2025Valuation date in cryptoasset claims
The volatility of many cryptoassets is such that the date on which they fall to be valued for damages assessment can be critical to the commercial viability of crypto litigation. Yet this is a subject that receives comparatively little focus. This article reviews two recent cases, one from each of the English and Singaporean High Courts, where the question of valuation date for cryptoassets has arisen and, on the basis of those decisions, suggests a practical framework for approaching valuation date issue in typical cryptoasset disputes.
12 January 2025The state of cross-class cramdown in the UK
Part 26A, introduced into the Companies Act 2006 by the Corporate Insolvency and Governance Act 2020 (CIGA), is an important tool to assist companies in financial difficulties, building on the Pt 26 scheme of arrangement. Part 26A contains a relatively thin set of statutory provisions that leave a great deal to be fleshed out by the courts. Judges have risen to the occasion and have begun to develop a structured approach to Pt 26A cases. There are, however, some difficult issues that are emerging in the process. This article aims to pull together a shopping list of these issues, to promote conversation among scholars, practitioners, and policy makers about the way forward.
25 November 2024
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