Feature

In this article, barrister Michael Collett KC considers the types of security commonly taken by banks providing trade finance and their potential weaknesses, in light of recent case-law arising from the collapse of oil traders such as Hin Leong, Zenrock and Gulf Petrochem.

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.

In this article the authors consider the relevance of the Loan Market Association’s (LMA) Defaulting Lender concept in non-traditional facilities such as those arranged by private credit funds and non-bank Lenders.

This article considers a key potential value proposition of smart contracts, namely the elimination of performance risk, and the trade-offs required in order to fully realise that potential. On the other hand, it considers the limits of any attempt to utilise smart contracts to oust the applicability of the law and legal systems.

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.

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.

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.

Nazeer Chowdhury reflects on HMT’s Consultation on Reforming the Consumer Credit Act 1974 (December 2022).

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.

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.