Note on the implications of Brexit for LMA facility documentation

Note on the implications of Brexit for LMA facility documentation

The Loan Market Association (LMA) has produced a supplementary note (the Supplementary Note) to inform members of market discussions/concerns related to the documentary implications of Brexit for LMA facility documentation. Members should note that the Supplementary Note does not replace the previous note, first produced by the LMA in September 2016 (the 2016 Brexit Note), but rather is intended to be read in conjunction with it.

The Supplementary Note focuses on the evolving concerns associated with the loss of the financial services passports in situations where facility documentation envisages continuing activities that may require a passport and looks in more detail at potential documentary mitigants. It is intended to increase market awareness of these issues.

Documentary mitigants to the loss of passporting rights include:

  • the ability to transfer rights and obligations to a licensed affiliate
  • the ability for an institution to change the branch through which it acts
  • contractual rights to exit the transaction under illegality protections
  • the ability to control the accession of additional members of the borrower group to existing lending arrangements

The schedule to the Supplementary Note discusses the extent to which these contractual mitigants are currently catered for in LMA facility documentation, in terms of, not only lending activity, but also the provision of letters of credit and bank guarantees, bank accounts and facility and security agent services. In particular, it highlights the current illegality provisions and wordi

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About the author:

Miranda is a solicitor specialising in leveraged and acquisition finance. She trained at Hogan Lovells International LLP and qualified into the international banking and finance team. During her time at Hogan Lovells she worked on a variety of domestic and cross-border transactions, acting for both borrowers and lenders. She also experienced secondments to Barclays Bank PLC and Kaupthing Bank hf.