Key point
- Purely voluntary redress payments are not caught by a paragraph 99 charge
The facts
A recent Scottish Inner House decision provides an overview of the approach to be taken in Scotland to interpreting performance bonds. The decision notes that the degree of compliance required when making a call may be strict, or not so strict, depending on the construction of the bond. The court’s decision also refers to the commercial purpose of the bond being key and may suggest that a more lenient approach to performance bonds is to apply in Scotland.
The Court of Appeal has reiterated some important rules for funders involved in debt purchase. Banking Litigation specialist Alasdair Urwin looks at the recent case of Bibby Factors Northwest v HDF and MCD [1].
Buyer beware
This case concerned a factoring agreement, pursuant to which a funder (Bibby) purchased unpaid invoices from another company (the Assignor), including debts owing from the defendant companies (the Customers).
In our recent note “Treatment of senior unsecured debt in European leveraged finance transactions: the need for an intercreditor agreement”, which can be viewed here, we addressed the increase in flexibility in European financings to incur senior unsecured debt and the risk that the lack of any agreed intercreditor arrangement may impair senior secured lenders’ ability to realise recoveries from a European Credit
Can’t get no satisfaction? Sometimes you can! Would you prefer to have security to cover a debt or the cash in the bank, challenges?
The interest rate mis-selling scandal took another twist recently when a landmark legal case was dismissed by the High Court. Had the case been successful it would have challenged the banks’ £2.1bn compensation scheme set-up to settle inappropriate interest rate swaps – however the decision only brings temporary relief for the banks.
Background
Conflict liquidators have been appointed by the High Court to a group of companies to investigate claims by the director that the companies’ bank had artificially distressed the companies and driven them into administration.
Background
The Angel Group of companies was founded by Ms Julia Davey. They owned residential and commercial properties which were rented out. The companies borrowed substantial amounts from Lloyds HBOS. After getting into financial difficulties, the bank appointed administrators from KPMG over them.
Litigation
A referral to the financial list!
In GSO Credit v Barclays Bank plc, the Commercial Court has given guidance on the interpretation of terms in, but not directly defined by, standard Loan Market Association (LMA) documentation which was used in the context of secondary trading of a commitment under a surety bonds facility.
With the cyclical fluctuation in oil and gas commodity prices, the UKCS has had its fair share of E&P companies going insolvent. As the UKCS matures, the profile of companies that invest in the region is changing. Many smaller parties, potentially with less access to capital, are now building positions. The commercial exposure is that some companies will not be able to meet cash calls, creating headaches for their co-venturers.