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Strategic 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 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 2024Shortening the settlement cycle to T+1: not if but when
This article introduces the policy debate as regards a further reduction of the settlement cycle. The US has moved to T+1 in May 2024, with the UK and EU making plans to follow suit.
28 June 2024Amendments to the Payment Services Regulations to combat Authorised Push Payment Fraud
The Treasury has announced its intention to amend the Payment Services Regulations 2017 (PSR). As a means of combatting authorised push payment (APP) fraud, banks will be given the power to delay the transferring of funds where they have established that there are reasonable grounds to suspect that the payment order has been placed subsequent to fraud or dishonesty. When utilising this discretion, they must inform their customer, who can then decide whether to rescind their instruction. Although the new power may prevent many instances of fraud, it is not without its problems, and this article discusses six sets of issues.
28 June 2024Everything settled? Risks for buyers trading on the secondary debt market
Trades on the secondary debt market typically go wrong because the lender is unable to settle the trade satisfactorily. In this article Matthew Watson considers the circumstances in which a selling lender may be unable to settle a trade and the position of the buyer in that event.
28 June 2024Electronic trade documents: what is a reliable computer system? and problems in contracting for a “reliable system”: clarification and correction
Paul Marshall offers a clarification and correction to two parts of his recent article of the above title.
28 June 2024SORA transition in Singapore: challenges for intra-period events in loan documentation
On 27 October 2020, the Steering Committee for SOR Transition to SORA (SC-STS) released the SORA Market Compendium (Compendium), which serves as industry guidance on key issues that need to be considered for market participants’ existing or future Singapore dollar financial products. In the Compendium, the SC-STS recommends for compounding in arrears the use of a cumulative convention, rather than the daily non-cumulative convention. The use of a cumulative approach to the compounding of SORA may pose difficulties for intra-interest period events. This article sets out some of the approaches which may address these difficulties.
13 June 2024Updated guide to English opinion letters in financial transactions
The City of London Law Society (CLLS), whose members include some of the largest international law firms in the world, has updated its Guide on English law opinion letters in financial transactions. The aim of the Guide is to save time and costs spent in discussing which law firm should provide an opinion letter, what should it cover and who may rely on it. The Guide is widely consulted by practitioners and well respected. The unabridged version (including full footnotes) is available at www.citysolicitors.org.uk. This article sets out an abridged version.
13 June 2024The new pre-pack regulations and the impact on secured lenders
If secured lenders (who fall within the definition of connected persons) and their advisers engage the evaluator prior to the commencement of administration and ensure open communication lines among themselves, the evaluator and the would-be administrator then the goal of increasing transparency in the pre-pack process would likely be advanced in a manner consistent with the efficient execution of a pre-pack sale.
13 June 2024Arc of the (financial) covenant: issues for project and real estate finance
Outside of the leveraged finance market however, financial covenants remain a key feature of a wide range of loan financings. This article discusses the financial covenant packages used on project financings, and on real estate and development financings, together with some of the common structuring and negotiation points that arise.
13 June 2024
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