The following Banking & Finance guidance note Produced in partnership with Oliver Hensby of RBS provides comprehensive and up to date legal information covering:
It is very common for engagement letters, release letters and reliance letters to be signed between parties when no external counsel has yet been appointed. Even if external counsel is appointed, it is common for such letters to fall outside of their scope of work. As such the onus will fall on the in-house counsel to review and negotiate these. This Practice Note is intended to provide tips, guidance and highlight potential issues to in-house counsel working on lending transactions who are involved in reviewing and negotiating such letters.
Each type of letter has a different aim:
release letters or hold harmless letters give access to reports on various aspects of the potential borrower’s business or market; they are prepared by third parties and are typically negotiated at the start of a transaction when the lender is considering whether to get involved in the transaction
reliance letters are entered into when a lender wants to rely on the information or report provided by a third party in respect of a borrower, business or transaction and these will typically be negotiated at the commitment letter stage or prior to funding of a transaction and will usually be a condition precedent to the funding or the transaction going ahead
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