Feature

Digital assets and reform of the financial collateral regime

In this article, Jonathan Haines considers whether the requirements of the UK’s Financial Collateral Arrangements (No.2) Regulations 2003 are compatible with market practice for digital assets in light of proposed reforms, particularly in the context of mixed portfolios, looking at whether digital assets qualify as cash or financial instruments, the position where the digital asset is held through a custodian, and where the digital asset represents equitable interests under a trust.

Asymmetric jurisdiction clauses: when will they be effective?

Asymmetric jurisdiction clauses (also known as unilateral or one-way clauses) allow one party greater choice than the other as to the courts in which proceedings can be brought if a dispute arises under the agreement. Such clauses are often used in finance agreements, where they typically require an obligor to bring claims in a named jurisdiction, but permit the finance parties to sue in any competent court. This gives the finance parties flexibility to choose an appropriate jurisdiction once a dispute arises depending on where the counterparty may have assets at that time.

Political risk insurance: safeguarding global supply chains amidst geopolitical tensions?

In today’s interconnected global economy, a stable supply chain is crucial for international business. From our experience, companies are increasingly concerned about geopolitical risk as a key risk factor when managing their supply chains. This article explores whether political risk insurance can help to safeguard supply chains against geopolitical disruption.

Understanding debt finance in football: debt factoring and secured loans

In this article the authors examine the use of certain debt products, namely debt factoring of future revenue streams and secured loan facilities, in the football finance market.

Proposed UK corporate redomiciliation: issues for lenders

Corporate redomiciliation is the process by which a company changes the place where it is incorporated, so as to become subject to the company law of a new jurisdiction whilst retaining its legal personality. In October 2024, a UK independent expert panel issued a report to the UK government setting out a proposed regime for corporate redomiciliation to and from the UK. This followed a government consultation on the principles of a corporate redomiciliation regime in October 2021. The government intends to consult in due course on a proposed regime design.
Many jurisdictions, including Singapore, Jersey, Luxembourg, Australia, New Zealand, Canada and the State of Delaware, already have redomiciliation regimes and companies in the EU can move to another member state. Lenders may therefore have already considered the implications of a company redomiciling but each regime differs and it is therefore important to consider the UK proposals and their implications.

Navigating the impact of portfolio company distress events under NAV facilities

Net Asset Value (NAV) facilities are a key liquidity tool for private investment funds, allowing borrowing against portfolio company valuations through loan-to-value covenants. This article examines how financial distress events are managed under such facilities via Material Investment Events – provisions that trigger the exclusion or downward adjustment of an investment’s value from the NAV calculation. It discusses various distress triggers, including insolvency events, adverse auditor opinions, accelerated indebtedness, defaults, and adverse judgments, and highlights the critical negotiation of these definitions. The article also explores valuation challenge rights, which allow lenders to contest fund valuations, and outlines the operational consequences for NAV facilities where portfolio company distress events trigger increases in LTV.

The expanding nature of undervalue transactions: recent cases and practical issues

Recent case law has raised some interesting points around challenges to transactions at an undervalue, which have application for insolvency practitioners who may wish to bring such cases, and creditors seeking to use this legislation to enforce judgments or otherwise challenge the disposal of assets by a debtor. In this article, the authors consider some legal and practical issues to which the authorities give rise and offer some considerations for parties who may find themselves involved in such litigation.

Non-bank financial intermediaries (NBFIs): leverage, liquidity and interconnectedness

This article examines the evolving regulatory approach to non-bank financial intermediaries (NBFIs), focusing on the European Commission’s 2024 consultation on macroprudential tools. Using alternative investment funds (AIFs) as a case study, the article explores the extent to which existing regulatory frameworks mitigate potential systemic risks posed by NBFIs.

Debt financing transactions in Northern Ireland: what practitioners need to know

In this article, Andrew McClurg identifies the key differences that practitioners should be aware of between English law and Northern Irish law, when entering into debt finance transactions.

Freezing the status quo: a critical analysis of 2024’s watershed moments in freezing injunction jurisprudence