Feature

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

Considerations for lenders to infrastructure assets

Lenders continue to structure financing packages to minimise the risk of default. However, wider risks now need to be in focus as the pace of investment in infrastructure increases. There are many different estimates of the amount of investment required in global infrastructure and energy assets. Each country has a different starting point and a different need – but trillions of dollars of investment per year for a sustained period is anticipated, with a significant amount provided by debt. With the rise of private and institutional debt providers alongside active export credit agencies, development finance institutions, wealth funds and commercial debt, the sources of debt capital are expanding to meet demand. In light of that increased debt, this article considers key issues for lenders funding infrastructure projects.

Bank Resolution (Recapitalisation) Bill: good policy, bad politics?

The UK’s resolution authorities successfully handled the failure of Silicon Valley Bank in 2023. The Bank Resolution (Recapitalisation) Bill (the Bill) seeks to address a lacuna identified as part of that process. The Bill is framed as a technical amendment to the regime for handling bank failures but, as this article argues, also highlights tensions between that framework and the government’s plans to improve the competitiveness of the financial services sector.

Cryptoassets as loan security

In this article Nik Yeo considers when it is possible under English law to create security over cryptoassets, looking specifically at the four forms of security interest: mortgage, charge, pledge and lien, alongside a potential control-based security interest, and the functional security that might be provided by DeFi protocols.

Scotland’s new statutory pledge: taking security over shares

Before the new regime was introduced, to take fixed security over shares in a Scottish company the shares needed to be transferred to the security holder (or its nominee). This causes a myriad of practical problems. The Moveable Transactions (Scotland) Act 2023, which came into force on 1 April 2025, allows (with a little help from the UK government) a new form of fixed security, the statutory pledge, to be taken over shares in Scottish companies that will side-step the bulk of these issues. This article explores the problems previously encountered in taking security over shares in Scottish companies and the advantages (and a few shortcomings) of the new statutory pledge. The old fixed security by transfer remains competent.

In sickness and in health: a review of transfer provisions in European leveraged loan agreements

Private equity sponsors, with good reason, are very aware of the importance of their portfolio businesses being able to control the types of lenders who hold their debt. They are keen to manage lender relationships throughout their investment period. Equally, it is important for lenders not to be unduly restricted in their ability to trade out of their loans should they need to. This obvious tension in the relationship between the borrower and its lenders has resulted in ever more detailed and restrictive transfer provisions in European leveraged loan agreements. This article considers the details of those provisions.