Insights

London – October 4, 2023: Crowell & Moring U.K. LLP has been recommended in four practice areas in the Legal 500 United Kingdom 2024. In addition, partner Andrew Knight has been named as a leading individual for asset based lending. The firm’s full rankings can be viewed here.

In the ever-evolving landscape of English law credit agreements in the European leveraged loan market, the dynamics of lending have undergone significant transformations in the last few years. One issue that has gained prominence is the increase in limits on the ability of lenders to transfer their loans and the associated restrictions imposed on potential new lenders. European syndicated loan agreements have historically included a standardised and expected set of transfer restrictions applicable to prospective lenders, reflective of the market guidance and templates issued by the Loan Market Association (“LMA”). Certainty of terms and the capability of an existing lender to sell out of a loan position have been the hallmark (and expectation) of the LMA loan market. However, trends in the drafting of credit agreements have contained a concerning increase in limitations on loan liquidity. As a result, many lenders are finding it difficult to sell their distressed loans. This article explores these trends, as well as their implications on the secondary loan trading market.

On 29 June 2023, the long-awaited Financial Services and Markets Act 2023 (the “Act”) received Royal Assent, clearing the Act’s final hurdle prior to its implementation. The Act is the framework for the UK’s post-Brexit financial legislative and regulatory landscape.  Focusing on the promotion of competition, innovation and investor protections, it hopes to ensure the UK’s continued leadership in the global economy by providing “a smarter financial services framework”. While the Act is 349 pages in length, we have set out some of the key themes and regulations currently making headlines.

There are few things as daunting to a vendor or supplier as its counterparty’s bankruptcy. The likelihood of a significantly discounted recovery for goods and services provided and potential loss of a customer may have long-lasted impacts on profitability.  Even worse, however, is the prospect that payments received in good faith prior to a debtor’s bankruptcy filing may be at risk of recoupment. In this alert, we address the risk that such payments are voidable as preferential transfers. Section 547 of the Bankruptcy Code codifies the power of the debtor to recover payments that were made within the 90 days preceding the filing. Very generally, a debtor (or trustee) may recover any transfer that is (i) made to or for the benefit of a creditor (e.g., a payment or grant of lien), (ii) on account of antecedent debt (i.e., a debt already incurred), (iii) made while the debtor was insolvent, (iv) within the 90 days prior to the petition date (or one year for insiders), and (v) that enables the creditor to receive more that it would have in a liquidation. The parties’ respective intent is irrelevant.

With the rise of cryptocurrency as a financial asset class, cryptocurrency-backed lending (“crypto lending”) has emerged as an innovative alternative to the conventional loan system.  While the notion of decentralized crypto lending promises to make the world a better place by potentially democratizing access to credit, crypto lending poses significant challenges to pre-existing legal rules as well as significant risk to lenders.  

The Spring Meeting is heading south to New Orleans. Register now to expand your international network of business law professionals April 6–8, 2017. Experience over 90 CLE programs and attend the committee meetings and events to build relationships with colleagues in your area of interest. Join them as they network, learn, and celebrate the rebirth of a great American city!

Asset based financing is a key source of credit for small and medium-size companies and for some larger, publicly traded companies as well. In contrast to equity financing where ownership in the company is diluted, asset-based financing allows companies to borrow funds against their own assets as collateral to generate cash for working capital and capital acquisitions without disturbing equity ownership.

During the Practising Law Institute's (PLI) Asset-Based Financing Strategies program, expert faculty will explore the most common forms of asset-based financing, and the legal rules governing them, with particular emphasis on Article 9 of the Uniform Commercial Code and the Bankruptcy Code. In addition, the faculty will share what they have learned in representing secured creditors and borrowers in structuring asset-based loans and in enforcing them inside and outside of bankruptcy. The faculty will also discuss some special problems in asset-based financing relating to intellectual property as well as a number of ethical issues that arise in asset-based financing.

This CLE webinar will discuss the mechanisms of asset-based financing transactions, including issues associated with the borrowing base, obtaining and perfecting a security interest in the assets as collateral under the UCC, and key terms in asset-based lending (ABL) loan documentation.