Feature

From London to Berlin: insights on taking security over receivables in Germany

This article explores some of the complexities and key considerations for lenders and legal practitioners when taking security over receivables in Germany. We consider: (i) the types of security that can be taken over receivables and their key features/formalities; (ii) how to navigate contractual restrictions on transfer; (iii) potential pitfalls when taking security over receivables; and (iv) secured creditors’ priority when realising security over receivables in an insolvency.

Lost in the labyrinth: the Court of Appeal in KVB Consultants

The decision of the Court of Appeal in KVB Consultants Ltd & Ors v Jacob Hopkins McKenzie Ltd & Ors  [2024] EWCA Civ 765 has important implications for anyone who deals with, appoints or acts as an appointed representative (AR). It applied a number of principles from existing case law but reached a surprising conclusion regarding how a principal can limit the responsibility it takes for its AR.

Money laundering in the supply chain: the use of “adequate consideration” to “cleanse” criminal property

Section 329 (2)(c) of the Proceeds of Crime Act 2002 exempts a person from criminal liability where criminal property is acquired for adequate consideration. Previous authority appeared to suggest that the provision of adequate consideration had the effect of "cleansing" criminal property. Thus, anyone who subsequently dealt with the property would not commit a money laundering offence. 

In Rex (on the application of World Uyghur Congress) and National Crime Agency  [2024] EWCA Civ 715, 26 June 2024  the Court of Appeal rejected this interpretation. In a decision which will have significant implications for businesses and professional advisors, the court held that the “adequate consideration” exemption is no more than a personal exemption. It has no impact on the status of the property as criminal property or recoverable property. It does not therefore operate to cleanse tainted property. 

How to address the “possession or control” issue in the UK Financial Collateral Arrangements

This article examines the legal uncertainties surrounding collateralisation in the UK, focusing on the Financial Collateral Arrangements (No.2) Regulations 2003, SI 2003/3226. It explores the challenges posed by the “provision” of collateral and the “possession or control” test, especially in practical portfolio management and derivatives markets. Through an analysis of key case law, the article identifies inconsistencies and recommends separate definitions for “possession” and “control”. These proposed reforms aim to align legal definitions with modern financial practice, thereby enhancing legal certainty, reducing systemic risk, and supporting the resilience of financial markets.

Contracting out of the default discharge rule

This article considers whether it is possible to contract out of the rule that the discharge of one surety results in the discharge of all co-sureties and whether such a clause in a contract complies with the Unfair Contract Terms Act 1977, in light of Cynergy Bank Ltd v Dinglis  [2024] EWHC 754 (Comm).

The limitations of limited recourse

This article unpacks the risks for lawyers advising on financing transactions which are, on their face, limited recourse transactions, looking at alternative routes to recourse which funders may have against the operating companies, their directors and shareholders who utilise these financing structures. The underlying security assets are typically some or all of real property, shares, receivables and bank accounts.

Assignment or charge over warranty and indemnity insurance policies as security?

This article considers a difficulty which may arise for buyers in M&A transactions when lenders take security over warranty and indemnity insurance policies by way of assignment of the right to be paid the proceeds of a future claim. This article suggests a better option for buyers would be to take a charge over the contractual right to be paid, rather than by receiving an assignment of the right to, the proceeds of the policy.

Tacking: what further advances since 2002?

In this article, the authors consider issues of interest to the syndicated loan market in the context of the “tacking of further advances” to existing lending secured by registered land, or mortgages of registered land, in light of s 49 of the Land Registration Act 2002, developments in jurisprudence on the topic, and the work of the Law Commission. The authors are indebted to Mr Trevor Moore, for his article in this journal entitled ‘Real Estate as Security following The Land Registration Act 2002’ (2004) 2 JIBFL 56, upon which this work builds. This work assesses developments since that date and addresses problems arising in the modern loan market where; syndicate lenders make further advances directly to the borrower under ancillary facilities/RCFs; where loan agreements state that the obligation to make a further advance does not apply for so long as there is an un-remedied breach of covenant; how the concept of the “agreed maximum amount” operates under facilities where there are incremental loans and up-tiering transactions; and how the absence of a robust intercreditor agreement with a subsequent chargee can expose the “senior” lenders to US-style “lender-on-lender” violence.

Anti-suit relief: Bourlakova and Magomedov and the non-contractual jurisdiction

The recent line of authority preceding Bourlakova ¹ and Magomedov²  had largely centred on the contractual jurisdiction for granting an anti-suit injunction (ASI) to restrain or prevent the commencement of foreign proceedings. However, the cases of Bourlakova  and Magomedov  respectively considered the non-contractual jurisdictions for granting ASI relief and anti-anti suit injunctive (AASI) relief. This article will examine the contractual and the non-contractual bases for the grant of ASI and AASI relief, before considering the Bourlakova  case and the court’s approach to single forum disputes, as well as the Magomedov   case and the court’s willingness to protect judicial process in England and Wales.

Mandatory collateralisation of hedging transactions under senior secured facilities

This article considers the implications of mandatory collateralisation being applied to hedging transactions under senior secured facilities.