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Banks’ climate liability: what to learn from states and oil majors
Banks are no real-economy actors, but they do face a very real risk of climate liability: indirectly, because of the litigation impending on clients with greenhouse gas-intensive activities and products; directly, because banks may fail their own legal duty to actively reduce their (financed) emissions. This latter risk is particularly relevant to many banks considering their mostly inadequate transition plans. Pim Heemskerk and Roger Cox analyse how the concept of climate liability may apply to banks. Their firm Paulussen Advocaten NV acts for Friends of the Earth Netherlands et al. in the landmark case against Shell plc and has acted in similar landmark climate cases against states.
19 March 2024Using guarantees for capital relief: legal characterisation matters
Financial institutions use a range of credit protection arrangements to mitigate minimum capital requirements under Basel III. The eligibility requirements for credit protection require consideration of the terms of the instrument in the context of the applicable legal framework. Credit insurance policies are subject to additional principles of English insurance law that can affect whether a policy is an eligible credit protection arrangement. Risk participation agreements share characteristics with credit insurance, but would not typically be considered to be insurance. This article gives an overview of the key eligibility requirements applicable to different types of guarantees, and considers the factors relevant to determining whether a risk participation should be treated as a contract of insurance.
19 March 2024Re Duomatic: plugging holes and fixing oversights but not all of the time
In this article Matthew Weaver KC considers when a lender or borrower company can rely on the Duomatic principle and the limits to its application.
19 March 2024The National Security and Investment Act 2021: secured lenders can take comfort in latest guidance but exercising voting rights remains a risk
In this article Rebecca Oliver considers how the further market guidance published in July 2022 by the Department for Business, Energy and Industrial Strategy (BEIS) – which includes commentary on the application of the National Security and Investment Act 2021 (NSIA) to security arrangements – helps secured lenders. The article considers where lenders still need to be wary of the NSIA implications and suggests how lenders and their advisers might limit NSIA risk in lending structures.
19 March 2024Claiming subrogation where a debt owed by a third party is discharged by a payment made by mistake
In this article Matthew Parker KC considers the remedy of subrogation where money is provided by mistake. The context is Citibank’s mistaken US$500m payment to lenders which has now, on appeal, been held not to have discharged Revlon’s debt. This follows Matthew’s earlier article in the July/August 2021 edition, ‘Payments by mistake: when will the discharge of an existing debt be a defence to a claim for repayment’ (2021) 7 JIBFL 457.
19 March 2024How has the UK National Security and Investment Act impacted cross-border M&A?
This article considers the types of M&A deals that the UK government has intervened in using its powers under the National Security and Investment Act (NSIA) and the conditions that have been attached to secure approval. It further considers the global position of the UK by comparison to similar regimes that regulate foreign investment in other jurisdictions (such as CFIUS in the US) and the potential issues faced by multi-national investors needing to grapple with multiple sets of rules.
19 March 2024Collateralised Fund Obligations (CFOs): the technicolor dreamcoat of fund finance from a US and UK/EU perspective
In this article the authors examine the mechanics of Collateralised Fund Obligations (CFOs) including GP-side and LP-side considerations, disclosure vs confidentiality, rating agency considerations and risk retention analysis.
19 March 2024Pension scheme’s liability driven investment strategies: what went wrong? A lawyer’s guide
This article explains liability driven investments (LDIs), identifies features of the statutory and regulatory framework applicable to investment by Pension Schemes, and examines what went wrong in the recent market turmoil.
19 March 2024Security interests in insolvency: UNCITRAL instruments and Greek law compared
This article compares the treatment of security interests in insolvency under the UNCITRAL Legislative Guide on Insolvency Law (Insolvency Guide or IG) and the UNCITRAL Legislative Guide on Secured Transactions (Secured Transactions Guide or STG) with the treatment of security interests in insolvency under Greek insolvency law. It briefly discusses the key objectives of these regimes, the insolvency estate and the impact of stays on individual actions, the effectiveness and priority of security interests, the use and sale of encumbered assets, the treatment of contracts, and the treatment of security interests in reorganisation and post-commencement finance. As an introductory remark, Greek insolvency law was recently reformed, although it retained much of the previous law. Its basis nowadays is Law 4738/2020 (Insolvency Code or IC), which regulates three (insolvency and pre-insolvency) procedures: These are: (i) the liquidation of the debtor’s estate and distribution of the proceeds to creditors; (ii) restructuring, which may bind all creditors by means of judicial confirmation of the restructuring agreement; and (iii) out-of-court workout, which applies to public law and financial creditors only, and is not court-supervised, given the apparent lack of need for protection of these powerful creditors.1
19 March 2024The suspense ends: court says certain ISDA bankruptcy defaults can be cured
In 2012 the Court of Appeal ruled that the counterparties of Lehman Brothers International (Europe) (LBIE) who had transacted under ISDA Master Agreements could suspend payment to the administrators indefinitely for so long as the Event of Default occasioned by the appointment of the administrators was continuing. As it has become ever clearer that LBIE will one day exit administration as a going concern (on a solvent basis), the administrators have maintained that the Event of Default will cease to be continuing and the holdouts will have to pay up. In one of the first cases to be heard virtually at the start of the COVID-19 pandemic, the administrators were finally able to ask the court whether implementation of their proposals for ending the administration would mean that the Event of Default was no longer continuing. This autumn the court ruled for the administrators.1 In addition to discussing the meaning of “continuing”, the judgment pays particular attention to what constitutes a Bankruptcy Event of Default under the 1992 and 2002 ISDA Master Agreements. Within the analysis, key variables were the importance to be given to factors such as the impact of an event on the counterparty’s credit risk and the permanent effect of the event on creditors’ rights. The granular analysis will be relevant to users of the ISDA Master Agreements but also to users of other contracts with similar wording such as credit derivatives.
19 March 2024
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