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. 

Pre-pack administrations are becoming more common. Four Holdings' purchase of Agent Provocateur illustrates the attraction of pre-packs — the ability to cherry-pick the best assets, acquire the goodwill of a well-known business that continues to trade, and retain its key staff without having to take on liabilities to creditors —and why existing management is likely to be supportive.

The English High Court in Lehman Brothers International (Europe) (In Administration) [2016] EWHC 2417 (Ch), in one of a series of cases arising from the Lehman insolvency, has had to consider (among other issues) the meaning of “Default Rate” under the ISDA Master Agreement.

Editor’s Note: Our good London colleague Ed Marlow recently published this as a Bryan Cave client advisory.

Including an unsecured creditor  in an agreed payments waterfall does not by itself confer on that unsecured creditor  the benefit of a mortgagee’s usual duties on enforcement of security, or a direct claim against the sale proceeds.

The English High Court in Fondazione Enasarco v Lehman Brothers Finance S.A. and Anthracite Rated Investments (Cayman) Limited [2015] EWHC 1307 (Ch) applied a common sense approach in the circumstances to the determination of Loss under the 1992 ISDA Master Agreement. The judgment of the judge (Mr Justice David Richards) is useful reading for those involved in structured products and derivatives.

Background

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?