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Supervisory tone sharpens further following ECB’s conclusions on its Desk Mapping Review
In this article, Dr Michael Huertas considers the impact on non-EU headquartered banking entities of the findings of the ECB-SSM’s Desk Mapping Review (Review). The Review assesses the governance and risk management capabilities of the EU operations of such non-EU headquartered entities.
20 March 2024Sustainability-linked loans: how “green-washing” risk is mitigated in documentation
In this article Greg Brown considers two recent clauses that are increasingly being included in sustainability-linked loan documentation to provide lenders with protection from the risks of “green-washing”.
19 March 2024ISDA Definitions 2021: Calculation Agent now required to produce objectively reasonable result
The recent amendments to the ISDA Definitions now require the Calculation Agent to perform its functions “in good faith and using commercially reasonable procedures to produce a commercially reasonable result”. This requires an objectively reasonable result, a more restrictive requirement than under the 2006 Definition. In turn, this means that determinations of the Calculation Agent are likely to be more open to challenge than under the previous definitions, which may generate an increased number of disputes. However, the additional protection offered by the requirement of a “reasonable result” should provide additional comfort to all parties. In any event, the amendments should encourage market participants to give careful consideration to whether they are willing to specify one of the parties to the transaction as Calculation Agent.
19 March 2024Risks for investors at the post-insolvency stage of the covered bond issuer
As a result of EU “legacy” provisions, covered bonds receive a clearly preferential regulatory treatment in the UK, when compared with other similar instruments, especially securities issued as part of a “true sale” securitisation. This article questions the extent to which such treatment is justified, particularly following a covered bond issuer insolvency event, when the risks are arguably greater than those present in “true sale” securitisation structures.
19 March 2024Russian sanctions in the English courts
This article considers the effect of sanctions imposed by the UK following Russian’s invasion of Ukraine in February 2022 on litigation, commercial transactions and insolvency, via an overview of a series of decisions of the English High Court in these areas.
19 March 2024Collateral quality or increased recoveries: CLO portfolio management in a time of credit deterioration
This article considers: (i) the delicate balance between competing interests and incentives in collateralised loan obligations (CLOs) with regard to restructurings of credit-impaired portfolio (broadly syndicated leveraged) loans; and (ii) recent innovations and changes to CLO documentation driven by specific well-publicised examples of leveraged loan restructuring.
19 March 2024Revisiting the transaction at an undervalue risk to UK covered bondholders
This article considers a particular aspect of the insolvency risk to investors in UK covered bonds. Specifically, it considers whether the transfer of assets from the Issuer to the SPV to create the cover pool, including any over-collateralisation, can be impugned as a transaction at an undervalue such that it may be reversed on application to the court by the administrator or liquidator of the Issuer under s 238 of the Insolvency Act 1986. Such risk has long been appreciated. However, the issue has been the subject of fresh comment because of the intended revocation of the Regulated Covered Bonds Regulations under the Financial Services and Markets Bill and the opportunity for a new regulatory regime with a different approach to risks of this kind.11 1
19 March 2024Preserving security interests and guarantees in key EU jurisdictions when the underlying obligation is varied
This article examines the position on the jurisdiction’s approach in France, Germany, Italy and Luxembourg to preserve security interests and guarantees when the underlying obligation (governed by English law) is varied, for example when the maturity date of an existing facility is extended. We think a brief analysis may be useful to understand if and how security interests and/or guarantees, provided by overseas parties incorporated in the abovementioned jurisdictions, still continue to be in force and whether additional formalities will need to be performed to avoid the additional obligations not being covered by the security or guarantee in case of an amendment or variation of the underlying obligation.
19 March 2024When Singapore REITs go under: risks and solutions for lenders
In this article the authors discuss the fundamental differences, from a Singapore law perspective, in how creditors might be treated in the insolvency of a real estate investment trust (REIT) compared to the insolvency of a company and explore some possible structures and mechanisms which might enable a REIT and its creditors to restructure or wind up a REIT synthetically. (In the UK, a REIT is a UK company limited by shares, with separate legal personality, so the issues raised in this article do not apply to UK based REITs).
19 March 2024Different jurisdictions’ approaches to Quincecare: England and Wales lead the expansive approach
Singularis remains the only case in England and Wales to establish breach of the Quincecare duty. So, is the industry getting carried away with the hype in circumstances where, on sober reflection, there may not be much of substance to be seen here? We chart the development of the Quincecare duty in various jurisdictions, before proposing an appropriate purview for the duty.
19 March 2024
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