The following Restructuring & Insolvency practice note Produced in partnership with Alexander Pelopidas, James Walton of Rosling King LLP provides comprehensive and up to date legal information covering:
This Practice Note looks at:
the key features of loan to value (LTV) covenants
possible issues with calling an event of default based on a LTV covenant breach
potential challenges to an event of default based on a LTV covenant breach
remedying a LTV covenant breach, and
the impact of the recovering property market on reliance upon LTV covenant breaches
LTV covenants are common forms of financial covenant which require the principal sum of an outstanding loan, when expressed as a percentage of the value of the security charged to a lender, to remain below a stipulated level during the term of that loan. While a lender relying on a breach of a LTV covenant to call an event of default has traditionally been seen as relatively uncontroversial, there are various issues to be aware of.
The inclusion of a LTV covenant in a facility or credit agreement will mean that the indebtedness of the borrower, expressed as a percentage of the value of the asset(s) granted as security for that indebtedness (such figure being referred to as the ‘loan to value ratio’), must not exceed a set percentage until the loan is discharged.
An example of a LTV covenant is as follows:
‘the Borrower shall procure that the amount of the Loan shall not at any time exceed 80% of the Market Value
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
On 29 August 2015, the Prudential Regulation Authority (PRA) published the PRA Rulebook (Rulebook). The transition from the Handbook to the Rulebook was intended to benefit PRA-authorised firms, to access clearer and more concise rules. Alongside the Rulebook, supervisory statements and statements
This Practice Note identifies the main torts (bar negligence and nuisance, which are covered elsewhere in our related content) and their key characteristics. Specifically:•trespass to land•trespass to the person•privacy/defamation•liability for animals•employers' liability•product
A limited company that proposes to issue redeemable shares must comply with the provisions of the Companies Act 2006 (CA 2006).Why do companies issue redeemable shares?A company may wish to issue redeemable shares so that it has an alternative way to return surplus capital to shareholders without
This Practice Note is an archive of news from the Loan Market Association (LMA) on LMA documentation and related topics. It covers LMA updates from early 2013 to January 2016. For the latest LMA developments since January 2016, see Practice Note: Loan Market Association (LMA)—latest news on
0330 161 1234
To view our latest legal guidance content,sign-in to Lexis®PSL or register for a free trial.