In Practice

Intra-group loan agreements: what do finance lawyers need to know?

In the current economic landscape, which is plagued with high inflation and interest rates, the legal agreements covering intra-group loan transactions are being reviewed with a fine-tooth comb from an arm’s length perspective. This is because loan agreements are a starting point for any transfer pricing analysis and if done properly (ie are arm’s length) can assist in justifying interest deduction locally ensuring that there is no, to limited, double taxation. The question is however – what does an arm’s length loan agreement entail? In this In Practice article, we explore this question and highlight the key aspects to consider with their potential repercussions.

“Double materiality”: what does it mean for non-financial reporting?

Companies have been publicly reporting on their financial performance for over a hundred years. However, they are increasingly having to make public non-financial disclosures relating to sustainability and environmental, social and governance (ESG) matters as a result of rules, laws and regulations issued by stock exchanges, governments and regulators worldwide. In the context of non-financial reporting, there has been increasing awareness of the concept of “double materiality” in recent years. In this article we clarify what “double materiality” means and provide the context of its regulatory background within the EU. We also consider the significance of “double materiality” and give our views on the potential consequences for companies of non-compliance.

The UK Financial Services and Markets Bill and UK Retained EU Law (Revocation and Reform) Bill: a comparison

Finding room for asset-backed financings alongside high yield and leveraged loan transactions

In the current environment of inflation and higher interest rates, securitisations may play an increasingly prominent role in offering access to cheaper and diversified funding. In this article, the authors explain why a corporate group may wish to consider exploring whether a securitisation would be available to it – and permitted under any existing high yield and/or leveraged loan documentation.

European CMBS and its new cousin, the CRE CLO

Iain Balkwill considers the differences between CRE CLOs and European CMBS and the rationale for their application.

Implications of proposed legislation in New York for sovereign debt restructuring

The New York legislature is currently considering three Bills that could substantially impact sovereign debt markets if enacted. The Bills would: (i) limit private creditors’ recovery in the event of sovereign default; (ii) block private parties from purchasing sovereign debt for the purpose of litigating a renegotiation of the debt; and (iii) create a binding, bankruptcy-like restructuring mechanism for sovereign debtors. This In Practice article looks at some of the potential implications of the New York Bills.

BTI v Sequana: practical implications for directors trading in the zone of insolvency

In this article, the authors reflect on the recent Supreme Court judgment in BTI 2014 LLC v Sequana SA [2022] UKSC 112 and its practical implications for directors trading in the zone of insolvency.

First Bankers Trust order against overseas cryptocurrency exchanges using new “gateway”

On 29 November 2022, Mr Justice Butcher handed down judgment in LMN v Bitflyer Holdings Inc. and others [2022] EWHC 2954 (Comm), which is the first successful Bankers Trust application against overseas cryptocurrency exchanges based on the new “disclosure gateway” for service out of the jurisdiction at CPR Practice Direction 6B §3.1(25).

When AI meets the Consumer Duty

Artificial intelligence (AI), with its power to process large volumes of data, can provide more personalisation of financial products and services for consumers at greater scale and efficiency, and at lower cost. It can, in principle, enable firms to provide better support for vulnerable customers (for example, to consumers without standard credit histories, or through the use of simplified advice). All this could help to advance the FCA’s desired outcome of increased access through greater financial inclusion.¹ This In Practice article considers the recent Discussion Paper to foster debate on this issue.

Soaring inflation and the case for index-linked baskets

In this In Practice article, Latifah Mohamed discusses the impact of current rates of inflation on baskets and other monetary limits in loan agreements, and considers the case for, and practical implications of, indexing such baskets and limits in response.