The following Banking & Finance practice note Produced in partnership with Peter Olds of Cleary, Gottlieb, Steen & Hamilton provides comprehensive and up to date legal information covering:
A capital call facility is a form of finance provided by a lender to a fund and typically secured against investors’ undrawn commitments. This note focuses on the main terms of capital call facilities, the due diligence that lenders will conduct, the standard security package requested by lenders and steps that borrowers can take to ensure that the negotiation process goes as smoothly as possible. For the purposes of this note, we have assumed that the fund vehicle will be a limited partnership that contracts through its general partner and that the right to call capital from investors lies with the general partner.
The general partner of a fund typically has to give investors at least 10 business days’ notice of any capital contribution needed to make an investment. Absent a source of temporary funding, this would amount to a two week stationary period that would put private equity purchasers at a competitive disadvantage compared to purchasers with immediate access to funds. To mitigate against this and other cash-flow issues (such as defaulting investors), many funds enter into capital call facilities (usually structured as revolving capital facilities) whereby a bank will lend to the fund pending receipt by the fund of the proceeds of a capital call from investors.
Capital call facilities have also been used by funds to boost their
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Fraud by false representationFraud by false representation applies to a broader range of conduct than the offences under the preceding legislation (the Theft Act 1968 (TA 1968)). No gain or loss need actually be made, and no deception need operate on the mind of the deceived for the Fraud Act 2006
BREXIT: UK is leaving EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For further guidance on the impact of Brexit on e-money requirements, see Practice Note: Impact of Brexit: Payment services and electronic money directives—quick
This Practice Note discusses the common law doctrine of privity of contract; the equitable and statutory exceptions to it; how the doctrine affects enforcing a contract against a third party and what happens when, notwithstanding the lack of privity, a contract has an indirect effect on a third
Overlapping insurance policesThere are various reasons why an insured may end up with overlapping insurance cover, whether deliberately or otherwise.Examples include the situation where the insured takes the benefit of other insurance arranged by another party or where, in the commercial world, risk
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