GLOSSARY
Acceleration definition
What does Acceleration mean?
Is the process where lenders have the right to demand the immediate repayment of all outstanding debt as a result of an event of default.
View the related practice notes about Acceleration
Trust deed—first time issuer's guide
Trust deed—first time issuer's guide What this Practice Note covers The aim of this Practice Note is to provide information and practical guidance on English law trust deeds to lawyers advising first time issuers of debt securities. This Practice Note focuses on first time issuers because debt capital markets documentation for subsequent issues tends to follow very closely the documentation which the issuer used for its first issue—the documentation stage of the first issue is therefore the time when an issuer and its advisers have an opportunity to consider the documentation in depth and (within the constraints imposed by accepted debt capital markets practice) to influence the form of the documentation. This Practice Note: • begins by discussing the advantages and disadvantages of using trustees in debt capital markets transactions and the nature of the relationship between an issuer and a trustee, and then • explains the practical aspects of the main provisions usually found in trust deeds for debt capital markets transactions This Practice Note covers trust deeds for issues of both: • unsecured debt securities—these are likely to be relevant mainly to issuers such as substantial corporates and financial institutions, and • secured debt securities—these are likely to be relevant to issuers such as housing associations, charities and small and medium-sized enterprises (SMEs) This Practice Note should be read together with Trust deed—first time issuer's negotiation checklist, which contains
Future debts, contingent debts, secured debts—the position under the Insolvency (England and Wales) Rules 2016
Future debts, contingent debts, secured debts—the position under the Insolvency (England and Wales) Rules 2016 Provable debts The general rule as to what constitutes a provable debt in administration, winding-up and bankruptcy is set out in the IR 2016, SI 2016/1024, r 14.2(1) (replacing IR 1986, SI 1986/1925, r 12.3): 'All claims by creditors except as provided in this rule, are provable as debts against the company or bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages'. This rule is complemented by section 322 of the Insolvency Act 1986 (IA 1986), which provides for proof of debts in bankruptcy, and IA 1986, s 382, which defines bankruptcy debts. It also needs to be read in light of IR 2016, SI 2016/1024, r 14.1 (replacing IR 1986, SI 1986/1925, r 13.12), which makes provision for 'debt,' ‘small debt’ and 'liability'. These sections and rules together form the legislative basis for the definition of what constitutes a debt and what debts are provable in different forms of insolvency procedure. Note that an office-holder may treat small debts, currently those of £1,000 or less, as proved by a creditor without the creditor in fact submitting a proof for the
Bulgaria—cross border banking and finance guide
Bulgaria—cross border banking and finance guide Coronavirus (COVID-19): Existing financings/utilised debt Does debt documentation in your jurisdiction typically foresee termination rights for the lender upon the occurrence of a crisis? If so, are eg customary material adverse effect (MAC) provisions enforceable in such instance? Yes, not only ‘LMA style’ loan documentation but also usual ‘in-house’ loan agreements typically contain material adverse change provisions (MAC) that entitle a lender to terminate an agreement and to cancel commitments. Similar clauses targeting deterioration of the condition of a borrower, borrower group or the value of the collateral granted are also contained in the general terms and conditions (GTC) of some Bulgarian banks. However, the lender's rights under such MAC provisions are limited by law and such provisions could be invalidated in court if not objectively justified. In particular, MAC provisions cannot be enforced due to the occurrence of a crisis per se and their enforceability should be assessed on a case-by-case basis. A specific-case-based approach is usually applied requiring that the relevant forum considers, inter alia, the direct effect of the crisis to the borrower's position, contingency measures adopted by the borrower, and the degree of care exercised by the parties to the loan relationship. No specific statutory ‘force majeure’ provisions exist and are typically not contractually foreseen that would entitle a borrower to prevent a MAC termination by a lender in
Early leavers—preservation
Early leavers—preservation THIS PRACTICE NOTE APPLIES IN RELATION TO OCCUPATIONAL PENSION SCHEMES In this Practice Note, references to the trustees of a scheme include a manager of that scheme. Preservation requirements Occupational pension schemes are required by statute to provide certain benefits for active members when their pensionable service ends before normal pension age (ie to preserve benefits for them in the scheme). Members who leave a scheme (ie cease to be in pensionable service) before normal pension age are referred to as early leavers (or deferred members). The benefits that schemes must preserve for an early leaver are called a short service benefit (or a deferred pension). The preservation requirements which occupational pension schemes must comply with in respect of early leavers are contained in: • the Pension Schemes Act 1993, Pt IV, ss 69–82 (PSA 1993), and • the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991, SI 1991/167 Insofar as
Sustainable development—definition and application at international level
Sustainable development—definition and application at international level Brexit 11 pm (GMT) on 31 December 2020 marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements came to an end and significant changes began to take effect across the UK’s legal regime. Sustainable development in the UK, post Brexit Sustainable development in the UK has been driven in part by EU legislation and funding. The UK’s exit from the EU may have significant implications for sustainable development and it is worth noting that, as of 1 January 2021, the UK is not expected to be involved in the European Commission’s future Sustainable Development Goal (SDG) initiatives discussed in this Practice Note. Despite no longer being part of EU indexes, the UK will continue to report against the UN’s SDG indicators. As a result, the UK government has not suggested that any dramatic changes to its sustainable development policies are on the horizon. The UK’s SDG Implementation Strategy gives a more detailed insight into how each government department’s policies contribute towards the goals. Each single departmental plan references the SDGs and outlines a broad commitment to uphold or surpass the current level of contribution after Brexit. Although, UK policies may now shift emphasis towards a particular pillar of
Enforcement of debt securities
Enforcement of debt securities Who can enforce? In an issuance of bonds the contractual enforcement rights of the bondholders depend principally on whether the issue is constituted with a trustee or not. A bond issue can be structured using a fiscal agent or a trustee. For more complex structures it is usual to have a trustee appointed. For information on the key parties in a debt capital markets transaction, see Practice Note: Parties in an issue of debt securities. For more information on the different issues that arise based on whether the bond issue is structured using a trustee or a fiscal agent, see Parties in an issue of debt securities — Fiscal agent or trustee. Where there is no trustee, each bondholder essentially enters a bilateral contract with the issuer (through the terms and conditions of the bonds) that creates a separate creditor-debtor relationship between each bondholder and the issuer. In this way, each individual bondholder is responsible for monitoring issuer compliance and enforcement on a bilateral basis. The terms and conditions of bonds issued without a trustee may, however, contain a collective action clause (CAC) which: • allows a specified majority of holders of the bonds to agree to a change in the terms of the securities proposed by the issuer, and • makes any change so agreed binding upon all holders of the
Structure and key features of an Ijarah transaction
Structure and key features of an Ijarah transaction A Shari’ah compliant leasing agreement takes the form of an ijarah which can either be akin to an operating lease, whereby the asset is returned to the lessor at the end of the rental period (much like hiring a car), or a finance lease, whereby the total rent for the asset equates to at least 100% of its full market value and title to the asset may pass to the lessee at the end of the rental period. For more information on these leases, see Practice Notes: Operating leases and Finance leases. In practice, the leasing of a Shari’ah compliant asset requires only minor deviations from a conventional lease. Since an ijarah is used primarily for Shari’ah compliant asset finance and residential mortgages, it is more common for the financing to be structured so that the asset passes to the lessee on maturity. This Practice Note will principally consider this form of ijarah. This Practice Note also assumes that the asset is in existence at the time of the financing; a different structure, an istisna’a, is used for a pre-delivery financing but is not discussed in this Practice Note. For more information see Practice Note: Structure of an Istisna'a transaction. Under the terms of an ijarah, the purchaser (in time, the lessor)
Terms and conditions—first time issuer's guide
Terms and conditions—first time issuer's guide What this Practice Note covers The aim of this Practice Note is to provide information and practical guidance on English law terms and conditions to lawyers advising first time issuers of debt securities. This Practice Note focuses on first time issuers because debt capital markets documentation for subsequent issues tends to follow very closely the documentation which the issuer used for its first issue—the documentation stage of the first issue is therefore the time when an issuer and its advisers have an opportunity to consider the documentation in depth and (within the constraints imposed by accepted debt capital markets practice) to influence the form of the documentation. This Practice Note: • explains the practical aspects of the key individual provisions (conditions) usually found in the terms and conditions of debt securities; and • (as raising finance in the debt capital markets is usually an alternative to borrowing from banks) compares them with the corresponding provisions in loan facility agreements This Practice Note assumes that first time issuers are not likely to be the major corporates, financial institutions, multi-lateral agencies (like the World Bank) or sovereigns which traditionally raise funds in the international investment-grade public debt capital markets, but rather issuers which may be active in particular sectors of the debt capital markets when market conditions are favourable or funding from other sources (such as bank
Best Practice Guide for Term Sheet Completeness—Explainer
Best Practice Guide for Term Sheet Completeness—Explainer The Loan Market Association and European Leveraged Finance Association published a guide in November 2020 entitled Best Practice Guide for Term Sheet Completeness, for use on leveraged finance transactions. The aim of the Best Practice Guide is to assist investors in the investment decision by ensuring that leveraged finance term sheets contain as much detail as possible as to key terms. To this end, the Best Practice Guide sets out a list of those provisions identified by investors as being of material importance to their investment decision. The Best Practice Guide presupposes a high level of understanding of leveraged finance terms and jargon. The Best Practice Guide lists the terms that should be included, and under each term sets out a bullet point list of the various points that the term sheet should cover in relation to that particular term. This Practice Note lists out the terms referred to in the Best Practice Guide and, under the heading Provision, the related points it suggests should be fully set out, along with brief explanation (where relevant) and links to relevant articles and Practice Notes. It can be used when drafting a term sheet to ensure all relevant points are included, or when reviewing a term sheet on behalf of a potential investor. See also the Glossary of acquisition finance terms and
Slovenia—cross border banking and finance guide
Slovenia—cross border banking and finance guide Coronavirus (COVID-19): Existing financings/utilised debt Does debt documentation in your jurisdiction typically foresee termination rights for the lender upon the occurrence of a crisis? If so, are eg customary material adverse effect (MAC) provisions enforceable in such instance? Generally, yes. In addition to ‘LMA style’ precedents—which will contain a variation of the recommended MAC form—also ‘local form’ bank loan agreements typically foresee termination/acceleration/commitment cancelation rights in case of material adverse changes. In the case of ‘local form’ documents, MAC provisions tend to be phrased more broadly than the LMA precedent—most notably, sometimes referring to circumstances not affecting the borrower directly (eg general adverse movements in the economy)—but are, more often than not, linked to the borrower's ability to comply with the loan agreement. That said, the enforceability of MAC provisions—especially if formulated broadly/exercised by reference to circumstances external to the specific borrower—may have its limits and will need to be assessed on a case-by-case basis. In principle, lenders will be able to rely on MAC provisions where termination/acceleration is justifiable due to borrower-specific circumstances. On the other hand, it is not a given that MAC clauses can be enforced due to the occurrence of a crisis per se. Limited case law related to rebus sic stantibus/force majeure scenarios would appear to lean in favour of a specific-case-based approach and require that the
View the related precedents about Acceleration
Offer document—definitions (Appendix 5)
Offer document—definitions (Appendix 5) Appendix [5]—DEFINITIONS The following apply throughout this document unless the context otherwise requires: [Offeree] or the Offeree • [insert full name of offeree] PLC, a public limited company incorporated in [insert country of incorporation] with registered number [insert number] [Offeree] Directors • the directors of [Offeree] at the date of this document, as set out in paragraph [insert number] of Appendix [4] [[Offeree] Group • [Offeree] and its subsidiary undertakings] [[Offeree] Optionholders • holders of options in the [Offeree] Share Option Scheme [Offeree] Shareholders • holders of Shares [[Offeree] Share Option Scheme • any of [insert names of all the share option schemes operated by offeree]] [Offeree] Warrantholders • holders of [Offeree] Warrants [Offeree] Warrants • the warrants to subscribe for Shares issued under the [Offeree] share warrant instrument dated [insert date]] [Offeror] or the Offeror • [insert full name of offeror], a [public OR private] limited company [and a wholly owned subsidiary of [Offeror Parent]], incorporated in [England and Wales] with registered number [insert number] [for the sole purpose of implementing the Offer] [Offeror] Directors • the directors of [Offeror] at the date of this document, as set out in paragraph [insert number] of Appendix [4] [[Offeror] General Meeting • the meeting of [Offeror] Shareholders (and any adjournment thereof) at which the [Offeror] Shareholder Resolutions will be considered, and if thought fit, approved] [[Offeror] Group • [Offeror] and its subsidiary undertakings] [[Offeror Parent] • [insert full name of offeror’s parent company], a [ [private OR public] ] company,
Schedule of special damages—low multi-track
Schedule of damages'>special damages—low multi-track [IN THE COUNTY COURT AT [INSERT] OR IN THE HIGH COURT OF JUSTICE] [[SPECIFY DIVISION]] [[SPECIFY SPECIALIST COURT]] [[INSERT LOCATION] DISTRICT REGISTRY] Claim No: BETWEEN [A B] Claimant and [X Y] Defendant ________________________________________________ SCHEDULE OF LOSS ________________________________________________ The Claimant reserves the right to alter, amend or add to this schedule at any time up to and including trial. BACKGROUND DATA Date of Birth 11 July 1981 Date of Accident 21 March 2019 Date of Schedule 21 March 2020 Age at Accident / Schedule 37 / 38 Vocation Launderette Assistant Date Claimant ceased work 29 October 2019 1 GENERAL DAMAGES 1.1 The Claimant relies upon the report of Mr M. Cornetto, Consultant Orthopaedic Surgeon, dated 13 December 2019. 1.2 The effect of the accident has been to bring forward the natural effects of the Claimant’s pre-existing degenerative condition in her lumbar spine by between 2 and 4 years. 1.3 During the period of acceleration, the Claimant’s ability to work is significantly limited, as is her ability to enjoy recreational activities. 1.4 The Claimant claims damages for pain, suffering and loss of amenity with reference to category [insert bracket] of the Judicial College Guidelines. GENERAL DAMAGES: £[insert amount] 2 PAST LOSS OF EARNINGS Actual earnings to 29 October 2019: £3,100 (from P60). Anticipated earnings to date of schedule: £2,500 gross x 12 months = £30,000 gross per annum After tax: £412.23 per week £412.23 x 52 weeks = £21,435.96 The net loss is therefore: £21,435.96 - £3,100 = £18,335.96 TOTAL CLAIM FOR PAST
Demand letter—borrower
Demand letter—borrower [To be printed on headed notepaper of the lender making demand] To: [Insert name of individual and/or position] [insert name of the Borrower or other relevant entity] [insert address] [insert fax no] [insert email address] [copy [specify to who]] By [ Hand OR First class post OR Facsimile OR Email ] [Insert date of letter] Dear Sirs Demand letter Facility agreement dated [insert date] between [insert name of lender] (the Lender) and [name of borrower] (the Borrower) (the Facility Agreement) [Debenture] dated [insert date] entered into by the Borrower in favour of the Lender (the Debenture) Unless expressly defined otherwise, all words and expressions defined in the Facility Agreement shall have the same meaning in this demand letter. References to “you” refer to the Borrower and references to “we” or “us” refer to the Lender. 1 Event of default 1.1 [As you are aware, an Event of Default has occurred and is continuing under the Facility Agreement, in particular, failure to pay the amount due on [insert date]. This is an Event of Default pursuant to clause [17.1.1] (Non-Payment) of the Facility Agreement. OR As you are aware, Events of Default have occurred and are continuing under the Facility Agreement including, without limitation, the following: (i) you failed to pay the amount due on [insert date] in breach of clause [17.1.1] (Non-payment) of the Facility Agreement, and (ii) you breached clauses [14] (Financial covenants) of the Facility Agreement
List of documents—takeover by way of offer
List of documents—takeover by way of offer References to the ‘Code’ are to The City Code on Takeovers and Mergersand references to the ‘CA 2006’ are to the Companies Act 2006. No. Document title Code/statutory reference (where relevant) Responsibility A. Preliminary documents 1. List of documents OfferEE/OFFEROR 2. Offer timetable OfferEE/OFFEROR 3. List of parties OfferEE/OFFEROR 4. Financial adviser’s letter to clients re: secrecy etc Rule 2.1(b) FINANCIAL ADVISER 5. Due diligence checklist Offeror and (if appropriate) offeree 6. Request to search offeree share register and register of interests, and for other information concerning offeree share capital, shareholders and option holders etc CA 2006, ss 114 and 808 Note 3 on Rule 10.1 Offeror 7. Request for information concerning share interests CA 2006, s 793 Offeree 8. Request for information supplied to competing offeror (if appropriate) Rule 21.3 Offeror 9. Memorandum for directors on legal, Code and other responsibilities Rules 2.1(b) and 19.1 OfferEE/OFFEROR 10. Any guidelines for interviews, publicity etc (perhaps included in Memorandum for directors above) OfferEE/OFFEROR 11. Directors’ responsibility statements Rule 19.2 OfferEE/OFFEROR 12. Directors’ powers of attorney OfferEE/OFFEROR 13. Opening Disclosure Statements for all relevant persons, and preparations for subsequent Dealings Disclosures Rule 8 all parties 14. Website notification, if required Rule 30.2 OfferEE/OFFEROR (as appropriate) 15. Engagement letter with financial advisers OfferEE/OFFEROR 16. Engagement letter with lawyers OfferEE/OFFEROR 17. Engagement letter with reporting accountants OfferEE/OFFEROR (as appropriate) 18. Engagement letter with valuers
Time and responsibility schedule (US IPO)
Time and responsibility schedule (US IPO) Time and responsibility schedule for a US initial public offering As of [_____________, 20__] [COMPANY NAME] Abbreviations C: Company UW: Lead Underwriter CO: Co-Underwriter CC: Company's Counsel UC: Underwriter's Counsel A: Auditor P: Printer IV: Investor Relations Firm CUSIP: Committee on Uniform Securities Identification Procedures EDGAR: Electronic Data Gathering, Analysis and Retrieval System SEC: US Securities and Exchange Commission IPO: Initial Public Offering CIK: Central Index Key FINRA: Financial Industry Regulatory Authority FWP: Free Writing Prospectuses MD&A: Management’s Discussion and Analysis of Financial Condition and Results of Operations DETAILED TIME SCHEDULE AND ASSIGNMENT OF TASKS PRE-FILING PERIOD (weeks 1–6) document/action needed Responsible party Status/completion date 1. Select managing underwriter(s) C 2. Select counsel C 3. Draft and circulate the due diligence request list and officers’ and directors’ questionnaires CC, UC 4. Hold an organisational meeting, at which the following matters should be discussed: C, UW, CO, A, UC, CC (a) Timetable (b) Size of offering (c) Assignment of responsibilities for tasks (d) Listing on securities exchange C, UW, CO (e) Discussion of financial statements required and of any special accounting issues to be addressed C, UW, CO, A, UC, CC (f) Recapitalisation of the Company (eg, share split or reverse share split) that will be required prior to offering C, UW, CO, A, UC, CC 5. Provide memorandum on gun-jumping/quiet period CC Prior to start of IPO process 6. Commence due diligence review and management presentations C, CC, UW, UC 7. Meetings to discuss due diligence and registration statement C, UW, CO, A, U, CC 8. Begin drafting the
Facility letter (term loan): single company borrower—bilateral—unsecured
Facility letter (term loan): single company borrower—bilateral—unsecured [TO BE PRINTED ON THE HEADED PAPER OF THE LENDER] [insert name and address of borrower] [insert date] Dear [insert full name of borrower] We offer to place at your disposal a Sterling loan facility in the aggregate principal amount of £[insert amount in figures] ([insert amount in words] Sterling) [for the purpose of [insert details]] on the following terms and conditions: 1 Definitions 1.1 In this letter, unless otherwise provided: Base Rate • means the base rate of [the Lender OR [insert name of Bank]] for the time being and from time to time; Borrower • means [insert name of company], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address]; Business Day • means a day, other than a Saturday, Sunday or public holiday, on which banks are open for business in London; Commitment Expiry Date • means the earlier of the date falling [insert number] months after the date of this letter and the date upon which the full amount of the Facility is first outstanding under this letter; Drawing • means [the OR a] drawing under the Facility; Environmental Law • means any law or applicable regulation relating to pollution or the protection of the environment, the conditions of any workplace or the storage, handling or use of any substance; Event of Default • means any one of the events specified in Clause 8
Acceleration clause
1 Acceleration 1.1 If at any time the Employer (acting reasonably) wishes the Contractor to complete the [design and] construction of the Works or any part thereof on or before a date earlier than the Completion Date or (as the case may be) any later date which would otherwise be fixed as the Completion Date under clause [insert extensions of time clause] (an ‘Acceleration’), the Employer shall serve a notice (‘Acceleration Notice’) on the Contractor, setting out details of the extent of the acceleration required and its proposed revised Completion Date as a result of such Acceleration.
Counter schedule of special damages—low multi track
Counter schedule of damages'>special damages—low multi track [IN THE COUNTY COURT AT [insert] OR IN THE HIGH COURT OF JUSTICE] [ [Specify division] ] [ [Specify Specialist court] ] [[INSERT LOCATION] DISTRICT REGISTRY] Claim No: BETWEEN [A B] Claimant and [X Y] Defendant ________________________________________________ COUNTER SCHEDULE OF LOSS ________________________________________________ The Defendant reserves the right to alter, amend or add to this counter schedule at any time up to and including trial. 1 GENERAL DAMAGES 1.1 The dates set out by the Claimant are agreed. 1.2 The Defendant relies on the evidence of Mr. T. Magnum, Consultant Spinal Surgeon, that a significant deterioration some 12 months after the accident was probably unrelated to it. If there was an acceleration, Mr. Magnum's view is that it was by no more than 2 years. 1.3 The Defendant’s contentions in relation to the effect of the accident on the Claimant’s employment are set out in section 2 below. As to recreational activities, the Claimant told Mr. Magnum that “most of all she liked to watch TV, mainly soap operas, and that was unaffected”. 1.4 On the basis of Mr. Magnum’s evidence, the Defendant will submit that general damages should be assessed with reference to category [insert bracket] of the Judicial College Guidelines. Alternatively, even if the Claimant’s medical evidence was accepted, damages should fall within category [insert bracket] of the Judicial College Guidelines. GENERAL DAMAGES: £[insert amount] 2 Loss of
Acceleration Agreement
Acceleration Agreement Date [insert date of Agreement] Parties 1 [insert name of Employer] of [insert address] incorporated in England and Wales with company registration number [insert company registration number] (the 'Employer') 2 [insert name of Contractor] of [insert address] incorporated in England and Wales with company registration number [insert company registration number] (the 'Contractor') Whereas (A) The Employer has entered into a contract with the Contractor for the[ design and] construction of a [insert brief description of the project] at [insert location of site] (the 'Building Contract'). (B) [There has been a delay to the progress of the works under the Building Contract OR The Employer has increased the scope of works under the Building Contract OR The Employer wishes to shorten the period for the completion of the works]. (C) The parties have agreed to accelerate the progress of the works in accordance with the terms of this Agreement. IT IS HEREBY AGREED as follows 1 Definitions and interpretation 1.1 In this Agreement the following expressions shall have the following meanings: Accelerated Completion Date • means [revised (accelerated) completion date]. Acceleration Payment • [means [£[insert amount of acceleration payment] OR the amount(s) to be paid by the Employer to the Contractor as set out in Schedule 2].] Acceleration Programme • means the programme [revised and updated by the Contractor to reflect the acceleration of the Works in accordance with this Agreement OR set out in Schedule 1
Offer document—further terms of the Offer (Appendix 1, Parts B, C and D)
Offer document—further terms of the Offer (Appendix 1, Parts B, C and D) Part B July 2021 changes to the Code In March 2021 the Takeover Panel confirmed that it would be proceeding with amendments to the Code, which included substantial changes to the treatment of offer conditions under the Code. For the purposes of this Precedent, the key changes were: • removing the concept of closing dates and instead requiring an offeror to specify an ‘unconditional date’ by which all of the conditions to its offer would need to be satisfied or waived • allowing an offeror to bring forward the unconditional date of its offer by making an acceleration statement • removing the distinction between the date by which the acceptance condition to an offer needs to be satisfied and the date by which the other conditions to the offer need to be satisfied or waived. Instead the Code would require all of the conditions to an offer to be satisfied by Day 60 • providing that, subject to certain exceptions, the acceptance condition should only be capable of being satisfied once all of the other conditions to the offer have been satisfied or waived • removing the requirement for an offer to lapse if, before a particular date, a phase 2 CMA reference is made or phase II Commission proceedings are initiated (this forms part of wider changes to
View the related q&as about Acceleration
What recourse does a bank have if assets are disposed of in breach of the terms of the finance documents?
What recourse does a bank have if assets are disposed of in breach of the terms of the finance documents? Why is the restriction on asset disposals needed and what clauses should the bank consider in these circumstances? In a secured financing, the bank will be concerned to ensure that the value of its security is not reduced in any way during the term of the facility agreement, ensuring it maximises recoveries in the event it wants to enforce the security. Another key concern is that unless the bank can show sufficient control over any given secured asset, any purported fixed charge over that asset could be recharacterised as a floating charge. Therefore, it is usual for the bank to put restrictions into the facility agreement and related security documents preventing the borrower from selling, transferring or otherwise disposing of any of its assets during the term of the facility agreement without the consent of the bank. For more information, see Practice Note: Undertakings (covenants) — Disposals undertaking. This will be subject to some exceptions such as assets sold in the ordinary course of trading (these assets will typically be subject to a floating charge rather than a fixed charge), see Practice Note: Floating charges. The bank will need to carefully review the provisions of all the finance documents where it becomes aware
Company A has the benefit of a debenture from company B. B intends to enter a creditors voluntary liquidation which is an event of default under the debenture. B has not missed a payment due to A and there is no accelerated payment clause. Can A appoint an administrator/receiver to B, and does the security cover the full debt or only the outstanding amount?
Company A has the benefit of a debenture from company B. B intends to enter a creditors voluntary liquidation which is an event of default under the debenture. B has not missed a payment due to A and there is no accelerated payment clause. Can A appoint an administrator/receiver to B, and does the security cover the full debt or only the outstanding amount? Enforcement—general Generally, a creditor’s rights of enforcement will be expressly provided for in the debenture itself (together with the instrument creating or evidencing the secured liabilities) and therefore, how and when a creditor can enforce its security will usually be a matter of construction of those documents. Implied powers of enforcement are rarely relied upon and usually only help where the secured liability has become payable (see Commentary: Part 2: When can the creditor exercise his powers?: Taking Security [9.27]). See Practice Note: Enforcement—debentures and floating charges. Appointment of administrators For information on appointment of administrators, see Practice Notes: • Out-of-court appointments—who can apply and in what circumstances? • Out-of-court administration appointments—the procedure You will note that, in relation to an out-of-court appointment of administrators, paragraph 14 of Schedule B1 to the Insolvency Act 1986 (IA 1986) provides that the holder of a qualifying floating charge in respect
Does the bankruptcy stop limitation running even though the bank is still claiming the debt against their security? Also does it preserve limitation for the charge itself and the right to appoint?
Does the bankruptcy stop limitation running even though the bank is still claiming the debt against their security? Also does it preserve limitation for the charge itself and the right to appoint? Once a debtor enters bankruptcy, the statutory insolvency regime is engaged such that creditors are able to prove for their debts in the bankruptcy instead of having to issue proceedings. Provided a debt is not barred by the Limitation Act 1980 (LA 1980) at the date of the bankruptcy order, the creditor will be able to prove in the bankruptcy for their debt, whether secured or unsecured. However, the making of a bankruptcy order will not stay the limitation period applicable to claims which fall outside the bankruptcy, including debts based on fraud. A mortgagee has the right to enforce their security during the bankruptcy. The court has no power to stay the enforcement of a secured creditor’s security and so the creditor’s right to appoint a receiver takes priority over the trustee in bankruptcy’s rights in administering the bankruptcy. However, any receiver appointed will not act as agent of the bankrupt and therefore will be personally liable as principal for any contracts entered into. If the receiver is improperly appointed, they may be liable to personally account for any funds improperly collected by them. LA 1980, s 20
If pursuing a Fatal Accidents Act 1976 claim for a person who was terminally ill but whose life expectancy has been shortened as a result of negligence, is there any legislative or case law guidance on whether sums can be claimed for bereavement and/or funeral expenses?
If pursuing a Fatal Accidents Act 1976 claim for a person who was terminally ill but whose life expectancy has been shortened as a result of negligence, is there any legislative or case law guidance on whether sums can be claimed for bereavement and/or funeral expenses? For the purposes of this Q&A it is assumed that the claimant has died. Causes of action When the victim of a personal injury action has died prior to trial, two distinct claims are possible. A claim can be brought for: • the benefit of the deceased's estate under the Law Reform (Miscellaneous Provisions) Act 1934 • on behalf of the dependants of the deceased under the Fatal Accidents Act 1976 (FAA 1976) While these claims can be pursued separately, they are often brought in tandem. For more information on these
What is the extent of an employer’s liability if an ex-member of staff were to commit a data breach, eg by stealing the employer’s client list containing personal information about individuals and using that list in breach of the General Data Protection Regulation?
What is the extent of an employer’s liability if an ex-member of staff were to commit a data breach, eg by stealing the employer’s client list containing personal information about individuals and using that list in breach of the General Data Protection Regulation? This question raises two complex and legally difficult issues, as follows: • first, whether the common law principles of vicarious liability apply in respect of an alleged breach of the General Data Protection Regulation, Regulation (EU) 2016/679 (GDPR) and/or for misuse of private information and breach of confidence; and, if so, • second, does vicarious liability apply in circumstances in which an employee has stolen data from the employer, without the employer’s knowledge or consent The relevant questions have very recently been addressed by the Supreme Court in the case of WM Morrison Supermarkets plc v Various Claimants. This was the case in which a disgruntled employee of the supermarket copied the personal, payroll data of 126,000 employees and published it on the internet. This was found to be because of an ‘irrational grudge against Morrisons’ because the employee had been the subject of disciplinary proceedings for minor misconduct. In respect of the first issue, reference should be made to paras [48]–[55] of the unanimous judgment of Lord Reed in WM Morrison Supermarkets. In respect of the second issue, the reference is to paras
Where C informally lends money to D for repayment plus interest on a monthly basis over 12 months and D defaults on a monthly instalment due (of either principal and/or interest), is there any authority that provides that the whole outstanding sum (remaining capital plus any accrued interest) becomes immediately repayable?
Where C informally lends money to D for repayment plus interest on a monthly basis over 12 months and D defaults on a monthly instalment due (of either principal and/or interest), is there any authority that provides that the whole outstanding sum (remaining capital plus any accrued interest) becomes immediately repayable? Loan agreements Generally, where money is lent without a time for repayment being specified, the sum becomes repayable immediately. However, parties are free to fix a time for repayment, which would include the sum being repayable by instalments, or to agree that the loan is only repayable on demand. Where loans are repayable by instalments, the loan agreement will often provide the ability for the lender to ‘call in’ the entire sum and interest if there is default on any instalment. These are known as acceleration clauses. The terms of the agreement Here, notwithstanding the informality of the stated lending arrangement, there is clearly a contract for the loan of money whereby the lender, C, has agreed to lend a sum of money to D in consideration of a promise to repay that sum with interest. The express terms of repayment provide for the payment of 12 monthly instalments. If D defaults on a monthly instalment, then that is a failure to repay the loan in accordance with the express terms of the contract. The issue is what effect
A house has been repossessed and the bank has possession. The mortgagor has now borrowed funds from a family member. Can the mortgagor now redeem the mortgage and 'dispose of the bank having possession of the property'? If so, how is this done—by application to the court?
A house has been repossessed and the bank has possession. The mortgagor has now borrowed funds from a family member. Can the mortgagor now redeem the mortgage and 'dispose of the bank having possession of the property'? If so, how is this done—by application to the court? The mortgagor has two types of right to redeem the mortgage. First, the legal right to redeem: the contractual right recognised at law to redeem the mortgage (ie pay back the mortgagee and bring the mortgage to an end) on a certain date. Secondly, the equitable right to redeem: the important right conferred by equity on the mortgagor to redeem the mortgage at any time after the stipulated contractual date (this right is part of the mortgagor’s composite equity of redemption which arises as soon as the mortgage is made. Given its importance, the questions therefore arise: when can the equitable right to redeem be exercised? And, when is it extinguished? Generally, as stated, there is no right to redeem until the contractual date for redemption has passed. However, at any time when the mortgagee has lawfully demanded repayment in full or taken possession in a way that is tantamount to seeking repayment in full (Bovill v Endle) or otherwise sought to resort to its security, the right to redeem arises (see Western Bank Ltd v Schindler). Note that if
What risks should lenders consider when granting unconditional amendments and waivers?
What risks should lenders consider when granting unconditional amendments and waivers? Amendment and waiver requests are an important aspect of managing any facility for lenders. During the life of a facility agreement, the needs of a borrower’s business may change, or unforeseen events may happen, which necessitate the need for an amendment or waiver. However, dealing with such requests needs to be managed carefully, irrespective of the apparent level of complexity of the underlying facility agreement. In particular, lenders should pause for thought before contemplating giving an unconditional amendment or waiver. The basic traps Just as a formula one car needs to be serviced by an experienced mechanic to ensure that it runs smoothly during a grand prix race, a facility agreement needs a similar level of care when it is ‘serviced’ to facilitate an amendment or a waiver. This will help to ensure that it retains the desired effect for the lender for the remaining duration of the facility. There are several traps that can catch an unsuspecting lender unawares when granting unconditional amendments or waivers. These include: • creating ambiguity within the facility documentation • not achieving the desired commercial effect that the lender requires • inadvertently diluting or restricting the lender’s draw stop, acceleration and/or enforcement rights • impairing or invalidating existing guarantees and security • unintentionally affecting rights and obligations in other finance documents, and • triggering liability vis a vis the lender
Are there any pitfalls to be wary of in respect of a claimant’s private healthcare funding treatment and wishing to put forward their own costs. Does a claimant have to accept a defendant’s offer to provide rehabilitation or are there other risks?
Are there any pitfalls to be wary of in respect of a claimant’s private healthcare funding treatment and wishing to put forward their own costs. Does a claimant have to accept a defendant’s offer to provide rehabilitation or are there other risks? It is quite common for claimants, particularly those who are employees, to have arranged private cover for healthcare and to seek to use that cover for the provision of certain treatments or therapies following an accident. This may be in respect of the costs of physiotherapy or surgery and, less commonly, for cognitive behavioral therapy or other psychological therapies. Pursuant to section 2(4) of the Law Reform (Personal Injuries) Act 1948, when determining the reasonableness of any medical expenses incurred, the possibility of avoiding those expenses or part of them by taking advantage of treatment available from the National Health Service is to be disregarded. Nonetheless, this does not give the claimant absolute freedom when incurring charges for such expenses. The major potential pitfall for the claimant in such circumstances is that the defendant will seek to argue that there has been a failure on the part of the claimant to mitigate their loss or that, for some other reason, a proportion of the costs should not be recoverable from the defendant. The most common basis for such argument will be that
As a trustee in bankruptcy are there any steps which can be taken to prevent a mortgagor from appointing an LPA receiver?
As a trustee in bankruptcy are there any steps which can be taken to prevent a mortgagor from appointing an LPA receiver? The power to appoint a receiver of specified property is a statutory incident of a charge and is a method of enforcement of the security. Property comprised in a bankrupt's estate is so comprised subject to the rights of any person other than the bankrupt (section 283(5) of the Insolvency Act 1986 (IA 1986)). The court has no power under the IA 1986 to stay the enforcement of his security by a secured creditor of the bankrupt (IA 1986, s 285(4)). Accordingly, the mortgagor’s right to appoint a receiver takes priority over the trustee in bankruptcy’s (trustee) rights in administering the bankruptcy. As a trustee you can and should, however, satisfy yourself that: • the security under which the appointment is being made is valid • that the right to appoint the receiver has arisen—under sections 101 and 109(1) of the Law of Property Act 1925 (LPA 1925) this will be the case wherever there is money due under the mortgage (which may be arrears of the monthly payments or an acceleration of
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Restructuring & Insolvency analysis: This article looks at how Germany has implemented Directive (EU) 2019/1023 as part of the Joint Project between INSOL Europe and Lexis®PSL to track implementation. Written by Frank Tschentscher, Business Recovery and Insolvency Partner at Deloitte, President of INSOL Europe and INSOL Europe’s Country Co-ordinator for Germany.
The UK’s National AI Strategy—governance, regulation and law
TMT analysis: Matt Hervey, Partner at Gowling WLG, considers the UK’s national artificial intelligence (AI) strategy in relation to its legal and regulatory aspects and the practical considerations for the UK to focus its attention on sector-specific regulation.
Takeover Panel confirms Code changes for 2022
Corporate analysis: The Takeover Panel (Panel) has published two response statements, which confirm various amendments to the Takeover Code (Code) that will take effect on 13 June 2022.
Construction weekly highlights—5 May 2022
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Environment weekly highlights—5 May 2022
This week's edition of Environment weekly highlights includes analysis on the use of climate stress tests, environmental, social and governance funds, the US Securities and Exchange Commission climate disclosure proposals, and the green capital regime for EU banks. In addition, this week the Department for Business, Energy and Industrial Strategy has announced that energy intensive industries (EII) compensation schemes will be extended by three years with an increased budget, the Environment, Food & Rural Affairs Committee has launched an inquiry into the issues impacting marine mammals, and the European Parliament has adopted a negotiation position on single charger rules.
Banking and Finance weekly highlights—5 May 2022
This week's edition of Banking and Finance weekly highlights includes: (1) News Analysis on the recent Lombard v Skyjets case for finance lawyers addressing a number of issues around default and acceleration in a loan transaction, (2) the LMA releases a revised version of real estate investment property facility agreement based on compounded RFRs, (3) the ISSB working group aims to align the international and jurisdictional requirements for sustainability disclosures.
Property weekly highlights—5 May 2022
This week's edition of Property weekly highlights includes: the prorogation of Parliament, cases on restrictive covenants and coronavirus (COVID-19) rent arrears and a reminder of the deadline for responses to the RICS consultation on an update to the Service Charge Residential Management Code.
Restructuring & Insolvency weekly highlights—5 May 2022
This week’s edition of Restructuring & Insolvency weekly highlights includes: R3’s new president’s (Christina Fitzgerald’s) thoughts on the latest insolvency statistics, the sentencing of Boris Becker following his conviction for offences relating to his bankruptcy, default and acceleration issues in Lombard v Skyjets, plus a round-up of other news and cases for restructuring and insolvency professionals.
Banking & Finance—April 2022 case round-up
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Defaults, waivers and acceleration—lessons from Lombard v Skyjets for finance lawyers
Banking & Finance analysis: The case of Lombard North Central plc v European Skyjets Ltd (in liquidation) addresses a number of issues around default and acceleration in a loan transaction and provides a good summary of the law around some queries that may arise when lenders seek to exercise rights under finance documents. This News Analysis provides a summary of the key takeaways from the 60 page judgment (and includes the relevant paragraph references).
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