All-asset security on leveraged financings: the scope of “excluded assets”

All-asset security on leveraged financings: the scope of “excluded assets”

In the December 2016 edition of Butterworths Journal of International Banking and Financial Law, Anne Cathrine Ingerslev, associate and Nick Benham, partner at Davis Polk & Wardwell look at all-asset security on leveraged financings.

The English security package on a leveraged financing is generally comprehensive, reflecting the flexible regime for granting security under English law as compared to many continental European jurisdictions. Security is typically granted by way of a single security document (debenture) which creates fixed and floating security over all, or almost all, of the charging company’s assets. However, more recently, the all-asset feature of the debenture has been increasingly challenged on financings which provide for certain assets to be excluded from the security package. The purpose of this article is not to pass judgement on the concept of “excluded assets”, which is in itself neither good nor bad – there may be sound (as well as unsound) legal or commercial reasons to exclude certain assets from the security package. The key message is that market participants should take note of the “excluded assets”, and watch out for related potential pitfalls, to make sure that the position set out in the debenture reflects the commercial deal that the parties expect.

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About the author:

Neeta started her legal career at Allen & Overy in 2008 in the midst of the global financial crisis and the collapse of Lehmans where she gained most of her paralegal experience.

Neeta also did a short stint in litigation at the Revenue and Customs Prosecutions Office in 2006. Neeta graduated with a 2:1 honours degree from University of London, Queen Mary College and went on to obtain a distinction from the College of Law in the Legal Practice. She has been working at Lexis Nexis since April 2013.