What does the referendum result mean for borrowers and lenders?

What does the referendum result mean for borrowers and lenders?

What are the immediate issues for existing loan agreements following the EU referendum result? David Varnham, partner and head of banking at Mills & Reeve, considers the next steps for borrowers and lenders and the implications for existing and future financial documentation.

In light of the outcome of the EU referendum, what will be the immediate concerns of borrowers and lenders in relation to their existing financing arrangements?

The referendum was a non-binding advisory referendum which does not have any legal effect. While politically it would be difficult for the current British government to disregard it, as a legal matter nothing has changed as a result of the referendum, and until the UK formally leaves, it will remain a full member of the EU with its people and businesses continuing to have full access to the single market.

It is unlikely that the result of the referendum of itself will have any immediate impact on Loan Market Association (LMA)-based loan agreements. While Mills & Reeve was aware in the run-up to the referendum of ‘Brexit clauses’ being discussed in the context of loan agreements (ie clauses requiring early repayment of loans or margin increases if the UK voted to leave), we have not heard of any such clauses actually being included in loan agreements.

As such, in the absence of explicit provisions specifying what will happen in the event of a vote to leave, parties should consider the general terms of their financing arrangements carefully to establish what impact (if any) the vote will have.

What should borrowers and lenders be thinking about in relation to their existing finance documentation?


The current economic and political uncertainty is likely to have an

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About the author:

Meet Neil:

1. Banking and finance lawyer with particular experience in asset finance

2. Likes Wales, wine, sport and anything else that means he doesn’t have the time to have to write personal information about himself

3. Thinks the law is a far broader topic than any of his family and friends who do not work in law

Neil specialises in banking and asset finance transactions with a particular emphasis in finance for shipping, aviation and renewable energy, as well as providing corporate transactional support. He trained and qualified at TLT LLP and spent a further four years working as a finance solicitor, acting for borrowers and lenders before joining the Asset Finance team at DLA Piper (UK) LLP.