Feature

US distressed debt techniques and minority protection in English law

The “drop-down” and “up-tier” restructuring techniques have become more frequently used by businesses with New York governed credit documentation facing financial difficulties. These techniques have been contentious; many transactions have resulted in litigation in US courts by the minority lenders. This article considers, if such techniques were used in relation to English governed credit structures, how English law principles of minority protection could come into play.

Hedging and lending: a practical guide

In this article the authors provide an overview of the relevant legal and documentation issues arising from the hedging and lending relationship in commercial lending.

The spectre of Spectrum: after Avanti and the sliding scale of floating to fixed charges

That case raises interesting practical questions on drafting within existing debentures and especially when considering the increasing prevalence of New York-law governed covenant packages in sponsor-friendly facility agreements and other debt documents. Those documents often include restrictions on the borrower’s ability to dispose of its assets. More importantly, they include exemptions to those restrictions where automatic release of the collateral is granted under the terms of the documents. How far can those exemptions go before a fixed charge is re-characterised? Avanti has clarified that horizon between fixed and floating charges, possibly moving where many commentators thought it had been. It renews the relevance of that horizon for charges in practice . The consequence is that some charges once thought floating are in fact fixed.

Are sole director companies all acting unlawfully?

The question of sole director companies has been thrown into some doubt by Idrees Hashmi v Paul Lorimer-Wing [2022] EWHC 191 (Ch), also known as Re Fore Fitness Investments Holdings Limited. If it is correctly decided, and sadly no appeal seems pending, then it could have very serious consequences for sole director companies – at least for anyone using the Model Articles set out in the Companies (Model Articles) Regulations 2008/3229 (Model Articles).

Interpreting ICC standardised rules in trade finance disputes: courts take an international perspective

Banking practice in areas of trade finance such as demand guarantees and letters of credit is standardised by a collection of contractual rules published by the International Chamber of Commerce (ICC). The application of domestic contractual interpretation principles may risk inconsistency in the way such rules are construed between jurisdictions. However, in relation to the most commonly used rules (the UCP 600, which apply to letters of credit), several courts (including the English courts) have tried to ensure that the rules are interpreted consistently with reference to their international consequences, as opposed to strictly in accordance with the governing law of the contract. Two decisions of the English High Court and the Qatari Appellate Court demonstrate a trend towards construing other sets of ICC standardised rules in the same way as the UCP 600.

What’s next for the EU Directive on NPLs?

The non-performing loan (NPL) market has a significant presence in the European financial markets, valued at around €27.4bn. EU Directive 2021/2167 on NPLs sets out new rules for credit servicers and credit purchasers aimed at promoting the secondary market for NPLs.

Galapagos: proper construction of Distressed Disposal provisions in intercreditor agreement

In this article the authors consider the recent English High Court judgment in Galapagos v Kebekus [2023] EWHC 1931 (Ch) which turned on the proper interpretation of Distressed Disposal provisions in an English law intercreditor agreement (ICA), typical in European leveraged financing transactions.

What does AI mean for professional services business models?

DeFi: game changer for regulatory reporting

In this article Dr Giovanni Bandi considers initiatives to transform regulatory compliance through “embedded supervision”, a regulatory framework that provides for the compliance with regulatory standards in distributed ledger technology-based markets to be automatically monitored.

The implications of the novel “Audit Duty” on professional service firms: Part 2

In this Part 2, barrister and Chartered Banker Jacob J Meagher discusses the impact and application of the “Audit Duty” on professional service firms (PSFs) and others, as expressed in Rihan v Ernst & Young [2020] EWHC 901 (QB).