The administrators of Avanti Communications Limited (the “Company”) sought directions from the High Court as to whether purported fixed charges in favour of the secured lenders to the satellite operating business should be recharacterised as floating charges (In the matter of Avanti Communications Limited (In administration) [2023] EWHC 940 (Ch)).
Summary of decision
Although the IMF recently announced at Davos that it would upgrade its global economic forecasts, with an improvement predicted in the later part of 2023 and into 2024, times remain difficult for many companies and their lenders – and are likely to remain so for a while yet.
The recent English case Arlington Infrastructure Ltd (in administration) and another v Woolrych and others demonstrates the importance of a secured creditor obtaining any consent necessary under the terms of intercreditor arrangements before taking enforcement action.
The facts of the case
EBITDA first rose to prominence in the US leveraged buy-out craze of the 1980s and has since formed the key metric of leveraged finance transactions across the world. In this article, we focus on its evolution in the European loans market, and explore how financial covenant and certain other protections in loan documentation have been eroded in recent years as a result of those changes.
This article first appeared in the November edition of Butterworths Journal of International Banking and Financial Law.
If only it were as simple as swishing your wand and chanting "Wingardium Leviosa" in your best Hermione Granger voice. The question of whether a fixed charge is susceptible to being recharacterised as a floating charge has challenged the legal community since before Ms Granger was even born. In fact some of the case law would not be out of place in the Hogwarts library (although it wouldn't have done anything for JK Rowling's sales figures).
What's the difference between a fixed and a floating charge?
The administrators of Avanti Communications Limited (the “Company”) sought directions from the High Court as to whether purported fixed charges in favour of the secured lenders to the satellite operating business should be recharacterised as floating charges (In the matter of Avanti Communications Limited (In administration) [2023] EWHC 940 (Ch)).
Summary of decision
Although the IMF recently announced at Davos that it would upgrade its global economic forecasts, with an improvement predicted in the later part of 2023 and into 2024, times remain difficult for many companies and their lenders – and are likely to remain so for a while yet.
EBITDA first rose to prominence in the US leveraged buy-out craze of the 1980s and has since formed the key metric of leveraged finance transactions across the world. In this article, we focus on its evolution in the European loans market, and explore how financial covenant and certain other protections in loan documentation have been eroded in recent years as a result of those changes.
This article first appeared in the November edition of Butterworths Journal of International Banking and Financial Law.
If only it were as simple as swishing your wand and chanting "Wingardium Leviosa" in your best Hermione Granger voice. The question of whether a fixed charge is susceptible to being recharacterised as a floating charge has challenged the legal community since before Ms Granger was even born. In fact some of the case law would not be out of place in the Hogwarts library (although it wouldn't have done anything for JK Rowling's sales figures).
What's the difference between a fixed and a floating charge?