This Practice Note gives a brief overview of the key legal issues and discussion points commonly encountered when financial institutions are deciding whether to offer receivables purchase/invoice discounting facilities or to provide a loan secured against the value of receivables. There are a number of reasons why suppliers may prefer to elect to sell receivables (on a no recourse or limited recourse basis) instead of borrowing. These reasons can include: • pricing—if the account debtor is a better credit risk than the supplier, the supplier might receive better pricing terms than if it were to borrow on an unsecured basis • credit lines—receivables purchase transactions may allow a seller to raise funds without using up credit lines with its financiers (though this will vary from financier to financier as different financial institutions have different rules on how they book receivables purchase transactions) • negative covenants—a supplier might be prevented from raising financial indebtedness under its existing facilities but might be allowed to sell receivables on a limited

Financial Services analysis: It was decided in the case of R (Aviva Life & Pensions (UK) Ltd) v Financial Ombudsman Service that the Financial Ombudsman Service’s (FOS) decision was at odds with the law and so was quashed. Jonathan Newbold, partner at Browne Jacobson LLP, comments on the issues raised and says the case serves as a reminder that when considering specific case law and precedent, there must be at least an equal focus on the broader principles of fairness.

Termination occurs every time a contract comes to an end. As well as dismissal, termination includes: • expiry (without renewal) of a fixed term or limited term • resignation • by mutual agreement • by operation of law See Precedent: Clauses—termination [Archived]. Expiry Employment law makes no distinction between temporary and permanent employment. Contracts are either terminable by notice or they continue for a specified period (fixed-term contracts) or until a specified event (limited term contracts) (see Practice Note: Fixed-term employees). Failure to renew a fixed-term or limited-term contract when it ends is not a dismissal at common law but is a dismissal for the purpose of the unfair dismissal legislation, so the employer will have to show that there was a fair reason for the decision not to renew the contract. Resignation Resignation is when an employee decides to terminate their own contract—usually (but not necessarily) by giving the requisite contractual or statutory minimum notice. For unfair dismissal and other statutory purposes, a resignation is only treated as a dismissal: • when

The act or process where a person (the distrainor) seizes the personal property of another, usually to satisfy payment of rent or other money owed.

The act or process where a person seizes the personal property of another, usually to satisfy payment of rent or other money owed.

A landlord's right to take goods as compensation for unpaid rent.

A court order giving the power to seize goods from a debtor to pay his debts. See warrants of control.

With many charities facing financial issues such as an inability to raise finance, reducing levels of donations, diminishing returns from funds held as investments, cancellations or defaults of material contracts, government funding cuts or accrued pension liabilities some may be tipped into insolvency. Definition of insolvency The Insolvency Act 1986 (IA 1986) does not provide an express definition of insolvency. However, two definitions are generally accepted: • where liabilities exceed assets (“balance sheet” insolvency) • where debts cannot be paid as and when they fall due (“cash flow” insolvency) Most charities are either incorporated (usually taking the form of a company limited by guarantee) or unincorporated. Others may be established under an Act of Parliament or Royal Charter. The rules relating to incorporated and unincorporated charities are different. So far as an incorporated charity is concerned it will be deemed to be “unable to pay its debts” where: • it has not paid , secured or settled a claim from a creditor exceeding £750 within three weeks of receiving a statutory demand • a creditor has been unsuccessful

This is a form of finance used to purchase the bonds'>corporate bonds or other debt of companies that have either entered into insolvency or appear likely to do so.

Banking & finance analysis: This news analysis summarises the important case of Galapagos Bidco Sarl v Kebekus in which the court looked at the meaning of certain provisions commonly included in the ‘distressed disposals’ clause in intercreditor agreements.

The equity and debt of companies that are in, or near insolvency, or in a similar state.

An investment strategy that exploits the difference between the relative and absolute mispricing in securities'>distressed securities.