Our focus is you

From simple loan agreements to the most complex of structured debt arrangements, we deliver successful, timely and cost-effective outcomes with the minimum of fuss. Whether you are a bank looking to restructure major customer loans or an SME or family business seeking the funding to grow your business, we can help.

We act for a diverse range of clients, from leading financial institutions and high street banks to SMEs and start-ups seeking to finance new ventures. Our Banking and Finance lawyers draw on the legal expertise that exists across the firm, enabling all our Banking and Finance lawyers to provide our clients with advice that is tailored to their needs.  We have specialist lawyers who advice on:

  • Asset Based Lending
  • Corporate Finance
  • Corporate and Commercial Lending
  • Debt Finance
  • Property Development Finance
  • Lending to individuals

Your key questions answered

Loan agreements – key terms

Your ability to negotiate the terms of a loan will depend on a range of factors, including the type of borrower and lender, the size of the loan, what it is to be used for and what security is available, if any. Key terms we can advise on include:

  • Terms sheet (Heads of terms)
  • Interest rates
  • Repayment profiles
  • Fees and early repayment charges
  • Financial and other covenants
  • On demand loans
  • Loans subject to events of default
  • Levels and nature of security

We frequently advise on whether term and conditions can be negotiated and whether there is value in doing so.

When are guarantees and/or security required?

Most loans are secured, as opposed to being unsecured. Security provides priority to a lender over unsecured creditors of a borrower if the borrower is unable to pay its debts.

Lenders frequently require guarantees from parties and persons other than the borrower whether the loan is secured or unsecured. There are many types of guarantee depending on the party or person giving the guarantee and what type of loan or liability is being guaranteed.

As well as lenders and financial institutions requesting guarantees in exchange for providing loans, we advise many financial institutions on providing guarantees, bonds and other types of similar instruments on behalf of businesses.

There are also many types of security depending on the assets or assets of the borrower being secured with security over property being the most common, and security over a security perhaps the most unusual. A debenture is typical security over all the business and assets of a company.

Once an asset is secured by the appropriate security document, the borrower is usually free to continue to use the asset but not to sell it without repaying the loan. If the loan cannot be repaid in accordance with the loan agreement the asset would usually be sold under the terms of the security document to repay the loan.

We regularly arrange security for loans in the form of debentures over the business assets of the borrower, as well as negotiating mortgages and fixed and floating charges. Many transactions involve directors giving personal loans or granting security over business assets, including intellectual property.

What is an intercreditor agreement? When is it required?

Businesses and individuals tend to borrow from a range of sources. Intercreditor agreements are often made between different lenders who have all provided loans to the same borrower and/or have the same security from the relevant borrower.

An intercreditor can deal with various matters between the creditors as well as the flexibility the borrower and security providers have to change the terms of its loan and security arrangements with any of the lenders.

Without such matters being agreed in writing disputes often arise if eg one lender is repaid ahead of all other lenders or a lender with little or no security takes enforcement action against the borrower when the lender with the largest loan may not want this to happen.

With the risk of disputes if an intercreditor is not signed between the parties, these agreements frequently require expert advice.

Loan defaults: what to do?

We advise lenders and borrowers on what to do if there is a payment or other default under a loan agreement (or there is about to be such a default).

Unsurprisingly, the advice is different depending on who is our client however we understand both “sides” so we can quickly recommend commercial solutions if the business is solvent.
If the business is insolvent, or may become insolvent, we would bring in colleagues from the necessary departments to advise on matters such as insolvency procedures to minimise losses to lenders and borrowers as the case may be, dealing with other creditors, disputes, employments rights and directors duties.

Can I lend to family and friends without a formal loan agreement?

Lending to family and friends is an attractive option for many clients.

Short straightforward loan agreements with only essential terms are possible if that is acceptable to both lender and borrower. Such a loan agreement by its straightforward nature will cover the essentials nevertheless avoid the most common disputes if a loan arrangement is not recorded in an enforceable agreement.
Consideration and advice will be required on the key terms of the loan and whether a guarantee and/or security is required for the lender.

For the lender to also consider – do I have the choice of making the loan in my personal name or from a company that I own? Is there a choice of lending to the borrower in their personal capacity or to their company?

Whilst the loan agreement is straightforward, expert advice is required depending on the specific parties involved and whether the loan is to be used to buy a property.

Formal documentation is also advisable where you are charging interest on the loan –you may have to prove the loan’s existence to HMRC, and it may have an impact on your overall tax position. Caution is also advised where the borrower is putting any personal property up as security for the loan.

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Frank Bouette
James Colvin
Jo Rovery
Tyne Harman

Recent work

Banking and Finance

Loan restructure to safeguard client’s commercial stability

We were involved in renegotiating and extending significant loan and revolving credit facilities on behalf of our client, a well-known plc. Our team acted quickly to ensure the new financing arrangements could be assessed by the company auditors prior to signing off annual accounts. Meeting the tight timeframe ensured the client had uninterrupted access to funding and avoided any threat to the financial stability of the business.

Banking and Finance

Misrepresentation – successfully defended a £15m damages claim for deceit

A series of loan notes were issued to raise capital for a care sector business. The Claimant (the capital provider) claimed that the financial information provided by our client was false and misleading. After failing to restructure its debts, the fund went into administration in 2014 resulting in the loss of the entire value of its investment. The fund issued a claim against our client in 2017. Our team successfully argued that the Claimant had failed to undertake reasonable due diligence at the time when they made the investment and failed to commence the claim within the six year statutory time limit. The claim was therefore found by the High Court to be ‘statute-barred’ and was dismissed.

Banking and Finance

Cost saving intercreditor agreement

We acted for a bank to renegotiate an intercreditor agreement that hindered the business of a longstanding customer. We advised a redesigned intercreditor with a built-in mechanism to allow new lenders to join the creditor arrangements at an appropriate and pre-determined priority position, based upon loan-type. With a large number of lenders and a private equity investor involved, negotiating the intercreditor was a complex process however its successful implementation means the bank’s customer is now able to access a greater array of financing options efficiently and without delay and high costs.

Banking and Finance

Multiple department advice on bank loan to beneficiaries of contested estate

Our client required complex cross department advice on a loan to a group of companies, controlled by two family members who were beneficiaries in a long-contested estate, to buy certain business assets of the estate. We provided seamless advice drawing on experts across our real estate finance, corporate law and private client law departments.

Banking and Finance

Hotel development finance facility

We acted for our client on a large and complex development finance facility to fund the redevelopment and upgrade of a large hotel site in a prime South East location. We have experts to advise on development finance and in the hotels sector who advised on the finance documents and creditor arrangements as well as negotiating with a major hotel chain on the non-disturbance agreement for the hotel.

Banking and Finance

Breach of covenants by restaurant chain

One of our roles is to advise on defaults and breaches of loan agreements. For this client bank its customer had breached its financial covenants. The customer, a nationwide chain of restaurants, had multiple loan agreements and it was a complex case because of certain pre-existing agreements between our client bank and the restaurant chain. The advice was extremely time sensitive and our swift delivery of all documentation demonstrated the manner in which we prioritised the commercial needs of our clients and their customer.

Private equity investor

Advised an innovative British bicycle manufacturer on their strategic partnership with a private equity investor; securing the businesses long term future and enabling it to broaden its product range and access international markets.

Dispute Resolution and Commercial Litigation Lawyers

Negotiated settlement for a high-net-worth family

We defended our client, a globally based family with international assets in property and art located in three different jurisdictions, against a claim for sums due under a loan agreement, which had fallen into default. Once proceedings were issued, the Claimant made an application for summary judgment and an agreement was reached prior to the determination of that application, providing an excellent and wholly successful outcome for our client.

News and insights

Penalties for breaching environmental legislation

Insights

An overview of the environmental regulator’s approach to the enforcement and prosecution of environmental offences which outlines the potential penalties and other implications for a businesses who breaches environmental legislation

25/02/2015

Enforcing possession orders – how not to do it

Insights

We explain how not to enforce possession orders, as shown in London Borough of Southwark -v- AA [2014] EWHC 500 (QB)

29/09/2015