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Oceanfill v Nuffield: a clear outlook for commercial landlords?
This article looks at Oceanfill Limited v (1) Nuffield Health Wellbeing Limited and (2) Cannons Group Limited [2022] EWHC 2178 (Ch) (Oceanfill), which was the first case in which the court (in a judgment of Deputy Master Arkush) determined the effect upon third-party guarantors of restructuring plans arising for sanction under Pt 26A of the Companies Act 2006. It considers the similarities in the court’s approach to schemes of arrangement and restructuring plans respectively, as well as the application of standard contractual principles in this area.
19 March 2024The 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 2024Law v policy: judicial review and judicial deference in the age of hyper-regulation
The increasingly articulate web of regulation which affects virtually every facet of economic activity in the EU risks giving rise to a blurring of the distinction between law and policy, impacting not only the primary targets of regulation, but also the approach of lawyers in interpreting the rules. While this article focuses on the regulatory framework which has impacted the banking industry in the years following the Global Financial Crisis (GFC), similar issues arise in other sectors affected by a strong regulatory footprint (eg data protection, antitrust). The purpose is to consider the limits of administrative action in light of the distinction between law and policy, by considering doctrines of judicial deference in the context of judicial review. The article reflects comments made by the author in the context of a keynote address on the occasion of the 6th biennial Stockholm Oxford Law Symposium held on 8-9 September 2022 by the Stockholm Centre for Commercial Law on the topic ‘Lawyers in time of turmoil: Rule of Law v Justice – Rulemaking and enforcement on steroids – how to ensure equal treatment and predictability in the application?’.
19 March 2024What is collateral special value?
Shares in a private company must be valued when they are given as collateral for a loan and the borrower does not pay the interest and capital when due. Unlike for quoted companies, the subjectivity in valuing a private company results in a wide range of valuations. Even when standard methods are used, there are additional questions of whether the valuations should include, for example, synergy benefits which would accrue to a buyer of the shares – the so-called “special value”. The range of valuations and special value could be problematic, particularly for the borrower. In such transactions, disputes can be avoided if the valuation method and the parameters required by the model are agreed at inception.
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 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 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 2024Security reinstatement provisions: worth the paper they are written on?
When I first agreed to pen this article, one of my esteemed colleagues remarked that he was surprised I had agreed to take this on. And when the Editor asked me a very straightforward question – “do security reinstatement provisions work?” – and I responded by saying “honestly, I have no idea”, the omens were not encouraging. Undeterred I enlisted the support of some colleagues at home base. The outcome of our collective efforts follows.
19 March 2024Repos used in LDI should be seen as either loans or derivatives, but not neither!
Defined benefit pension funds, having leveraged billions of pounds of their gilt positions using repos, were exposed to a fall in prices. This occurred in September 2022 and large losses were sustained. It is not permissible for pension funds to leverage their assets using loans or derivatives (other than for narrow specific purposes). The question then arises of whether repos are loans or derivatives, or something entirely different. Who bears the losses may well be dependent on the answer. The author’s conclusion is that repos are properly either loans or derivatives.
19 March 2024
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