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The Mezzanine Lenders successfully take control of The LYCRA Company
The financial restructuring of The LYCRA Company is a rare example in the market in recent years of junior lenders effectively “driving the bus” and, in so doing, taking the fight to the sponsor. The Mezzanine Lenders seized operational control of the group across several jurisdictions, through the appointment of receivers and the cascading of board changes on an expedited basis ahead of acquiring the equity in the Dutch parent by way of one of the largest credit bid processes undertaken in the Netherlands to date. It is a critical illustration of the fact that even structurally (and contractually) junior creditors can work with senior creditors to deliver a carefully planned and negotiated outcome that preserves value in the interests of all creditors.
19 March 2024Loan documentation and risk-free reference rates: current overview
In this article, we give a brief overview of RFR referencing loan documentation in the English law syndicated loan markets together with the current and future issues of use of a term SOFR on USD syndicated loan transactions and risk-free reference rates in the context of euro and EURIBOR.
19 March 2024Contractual novations: the “partial novation” phenomenon and is advance consent absolute?
Loan agreements, particularly those documenting a syndicated lending arrangement, may provide that a lender’s rights and obligations are transferable to another bank or financial institution by delivery of a duly completed and executed transfer certificate to a designated person, such as a facility agent. The borrower’s active participation is not required in this process. That has not prevented English law from recognising the transfer to be an effective novation, for the borrower is said to have consented in advance to the novation through its agreement to the transfer clause. Is the lender’s ability to transfer its loan interests an unfettered one? An interesting question also arises as to the effect of a novation with one lender on the other syndicate lenders’ contracts.
19 March 2024Cryptographic tokens: three categories of personal property?
In this article Lodewijk Van Setten questions the recommendation by the Law Commission in its recent Digital Assets Consultation Paper for a third category of personal property under English law called “data objects”. He suggests that the reconceptualization of the concept of property is not necessary and recommends a more constrained approach.
19 March 2024“More image than a shade”: the time is ripe for reform of the Consumer Credit Act 1974
Nazeer Chowdhury reflects on HMT’s Consultation on Reforming the Consumer Credit Act 1974 (December 2022).
19 March 2024Improper leverage? Own interest conflicts and the designation model in leveraged finance transactions
Designation in leveraged finance deals – the process by which the sponsor’s solicitors select the solicitors to act for the lender – has become increasingly controversial and is attracting the attention of regulators. It has the obvious potential to give rise to suggestions that the lender’s solicitors may be conflicted, between their duties to their client and their self-interest in securing future designations by sponsor firms. Simon Salzedo KC and Tom Wood consider the extent to which designation may give rise to claims of a breach of existing English conflicts law and professional rules.
19 March 2024Time to hit the road: considerations when replacing trustees on secured debt transactions
This article explores common issues which may arise when the trustee on a secured financing is replaced, including the transfer of the trust property.
19 March 2024ESG investing: a growing gulf between the US and Europe?
In this article Camilla Macpherson provides an overview of the key initiatives and developments in Sustainable Finance Regulation in the EU, UK and US. She then highlights how ESG has become a political battleground in the US and considers the implications for firms, particularly those operating internationally.
19 March 2024Reforming the UK’s e-money and payment services safeguarded funds regimes: better safe than sorry
This article examines the safeguarding requirements for e-money institutions and payment services firms and their treatment under the UK’s depositor protection regime, which was recently updated to address the legal uncertainty resulting from the Court of Appeal’s decision in the Re Ipagoo case and highlights the likelihood of further regulatory reform in this area.
19 March 2024What’s at stake? The legal treatment of staking
Since 15 September 2022, the majority in number and value of blockchain systems are secured by proof-of-stake consensus mechanisms. Yet the legal treatment of staking has received little attention. Further confusion is caused by the fact that the use of the word “staking” has generally focussed on the existence of a return, rather than consideration of how that return is generated. For this reason, the term “staking” is now used to refer to a range of materially different activities, from staking for the purposes of validating a blockchain protocol (the primary focus of this article) to staking referring to DeFi lending and staking as used as a rewards system in NFT markets or online games. This article considers the features of different staking arrangements, describes some of the potential legal consequences of those arrangements and identifies issues that might arise as proof-of-stake consensus mechanisms evolve. The article suggests that validator staking within proof-of-stake systems is a very different type of arrangement, with a very different risk profile, to the provision of other staking models, even if colloquially or economically they are seen as “equivalent”, as both arrangements generate a return and involve locking up tokens.
19 March 2024
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