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Is there room for more than one concept of Material Adverse Change in your Facility Agreement?
This article was inspired by the UCL ‘Contract Law and the Unexpected’ conference on 16 May 2025 (Conference). At that conference a paper was presented which argued that material adverse change (MAC) clauses are similar to force majeure clauses and deal with uncertain events, but often with insufficient clarity. In this article we look at whether conventional MAC clauses in facility agreements are fit for purpose, and what that purpose is. We also look at a hybrid approach which creates a contractual renegotiation obligation when there is a change which may have a material adverse effect on the business or operations of the Borrower but falls short of being likely to cause a financial covenant breach or insolvency. This is also considered in the context of the debate about the role of good faith in contracts and its application to debt financing arrangements.
01 July 2025Financial crime reforms creating new risks and challenges for firms
The Economic Crime and Corporate Transparency Act has introduced a novel failure to prevent fraud offence, as well as extending the criminal attribution doctrine to hold large firms liable for the actions of a wider range of senior managers. In this article the authors consider these reforms as well as areas of uncertainty and new risks. They provide some practical guidance.
01 July 2025The continuing inviolability of standby letters of credit
In this article the authors consider whether the English courts’ recent prioritisation of the inviolability of standby letters of credit has led to outcomes that can be perceived to be unduly kind to beneficiaries.
01 July 2025You can dip twice but can you only prove once? The insolvency implications of “double dip” transactions
In this article the authors consider the insolvency implications of “double dip” transactions, which are becoming increasingly prominent as a form of liability management exercise. The authors first outline some of the different forms of “double dip” transaction structures, before placing them within the existing English insolvency law framework. They conclude with some practical considerations.
01 July 2025Layering it on thick: the evolution of the super senior intercreditor agreement
It has been over five years since the Loan Market Association (LMA) published its form of super senior/senior intercreditor agreement for use on European direct lending transactions. While this document has become the starting point for intercreditor agreements on almost all of these transactions in Europe, there have been a number of evolutions to its terms during this period to reflect the requirements of financial sponsors as they look at more complex capital structures to meet the financing needs of their portfolio companies. This article tracks some of these developments and looks ahead to further changes which may be on the horizon.
01 July 2025Atishoo, atishoo: we all fall down? Implications of business disposals upon cessation of business clauses
In this article Charlotte Eborall examines how a company considering a change in the entity’s structure or business by divestment of part or all of its business can avoid potential issues relating to the triggering of a “cessation of business” event of default clause. It also considers how the courts might approach the question of interpretation of such clauses should one proceed to trial.
01 July 2025MiCA: unresolved questions
The EU Markets in Crypto-Assets Regulation has been in force for the better part of a year. Still, many legal questions surrounding its scope of application remain unanswered and new questions are emerging at a rapid pace. Among those open issues are whether European Markets in Crypto-Assets Regulation’s (MiCA’s or MiCAR’s) asset-referenced tokens can be characterised as derivative financial instruments under MiFID II, as well as their differentiation from “other” cryptoassets. The understanding of white paper obligations is evolving. The question of how cryptoassets service providers (CASPs) may use cryptoassets initially received for custody purposes is being debated, and the link between EU and national law raises further questions about how to insolvency-proof a CASP’s custody business. This article aims to shed light on these topics and provide ideas for an understanding of MiCA’s provisions going forward.
09 June 2025The Law of Property Act 1925 turns 100 this year: Happy Birthday!
The Law of Property Act 1925 (LPA) came into force 100 years ago this year. It received Royal Assent on 9 April 1925, and it came into force on 1 January 1926. The LPA brought overdue coherence, eased property transactions for the next century, and still forms the basis of English land law today. We set out why this law came about, how it helped, and how it continues to help us.
09 June 2025The LMA’s guidance on fallbacks to interbank term rates: a call to arms
Whilst the lack of incident when the last LIBOR lights were turned off at the end of September was a relief to many, the Loan Market Association’s (LMA’s) recently released Guidance on fallbacks to interbank term rates and LMA documentation (LMA Guidance) is a crucial reminder of the importance of fallbacks to other interbank term rates and an indication that there remains ground to cover.1 Whilst the key points are discussed below, the LMA Guidance will reward careful reading by all those involved in loan transactions.
09 June 2025Splitting the difference: transfer of assets and liabilities in restructurings to reset business profile
A business may need to restructure for a variety of reasons; these may be wider industry issues or issues specific to the business, certain assets or segments therein. Issue may arise, among other reasons, due to underperformance, rising costs or a diversion of management time. Management may look at a business in a way that differs from creditors, with the former particularly interested in future growth and the latter likely looking at shorter term cashflows. In a restructuring context, creditors may make the transaction conditional on a refocus of the business as a part of a wider deal to support the business (or a part thereof) in its future operations. Alternatively, there may be alignment on the non-core nature of certain assets and, as part of a restructuring, an agreement to isolate the value of those assets to repay creditors. This article explores general themes that may be relevant when splitting certain assets and liabilities as part of a restructuring. Crucially, transactions of this nature are bespoke and, whilst they are unlikely to be the prevailing method of restructurings, they may provide optionality or tailored solutions which may benefit all parties.
09 June 2025
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