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The 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 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 2025Enforcement 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 2025Offshore case law on bondholders as contingent creditors
It is critical to the operation of bond markets that ultimate account holders bringing liquidation proceedings against bond issuers are given only limited recourse to issues. One recent BVI decision, in which it was held that accountholders have standing as contingent creditors to present a winding-up petition against the issuer, unexpectedly stretches those limits. This article examines whether that decision is correct.
12 January 2025MFN clauses in private credit facility agreements
This article examines most-favoured nation clauses (MFNs) in private credit facility agreements in recent years with a particular focus on how MFN clauses are typically calculated and the scope of the carve-outs which often feature in such clauses.
12 January 2025Indirect transfers of value “at the expense of” a claimant: comparative perspective
An essential ingredient of an unjust enrichment claim is that the enrichment be “at the expense of” the claimant. In a typical case where the claimant transferred value to the defendant directly, the requirement is obviously met. Where however more than one transaction and/or entity is involved, the analysis will have to be more carefully considered. Terna Energy Trading DOO v Revolut Ltd [2024] Bus LR 1401 (Comm) provides much-needed clarification here, offering analyses in terms of an agency relationship and a series of co-ordinated transactions. Singapore and Hong Kong both adopt a very similar – if even slightly broader – approach.
12 January 2025Liability management exercises in England: where are we?
In this article the authors consider how an English court might view a US-style liability management exercise which: (i) relies on the consent of a majority of creditors within a class to bind a minority within that class; and (ii) treats dissenting creditors less favourably than assenting creditors.
12 January 2025Does 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 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 2024The asset sales covenant: sometimes when it’s there it’s barely there at all!
In this article Michelle Gilmore-Parry explains how the asset sales covenant in top-tier European leveraged financings has evolved and discusses the key considerations for lenders when reviewing the asset sales covenant and related definitions in leveraged finance documentation.
24 November 2024
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