Lending Law Report

A blog about financial transactions

We had a great turnout on Thursday morning for the Lending for the Private Rented Sector (PRS) seminar at our London offices. We had over 60 external attendees, with clients from RBS, Savills, Barclays, Capita Asset Services, Lloyds Banking Group, and Wells Fargo. Presenters included Francisca Sepulveda of Reed Smith, George Cotterell of Venn Partners, Gareth Blacker of the Homes and Communities Agency (HCA), Sharon Quinlan of Barclays, and Tom Stenhouse of Patrizia UK. Discussion…
Basel III regulations governing high volatility commercial real estate (HVCRE) went into effect. The HVCRE rules require lenders to assign a higher risk weighting to loans for the acquisition, development or construction (ADC) of commercial real estate. For more information, please check out the following articles on the Real Estate Legal Update blog: High Volatility Commercial Real Estate: New Rules Have Effect on Cost and Availability of Mortgage Capital Are Small Business Administration 504 Loans
In this second and last part of this series (click here for Part 1) we discuss the changes to Article 9 (Secured Transactions) of the Uniform Commercial Code of the State of New York (the “NYUCC”), as recently amended by Chapter 505 of the New York Assembly Session Laws of 2014 (the “Act”) and the pitfalls to beware of given differences between the NYUCC, as amended, and those recommended amendments by the National Commissioners…
New York is the jurisdiction of choice for a majority of international and interstate financial transactions. Thus, lending lawyers and their clients should pay special attention to Chapter 505 of the New York Assembly Session Laws of 2014 (the “Act”), which amends the Uniform Commercial Code of the State of New York (the “NYUCC”). Over the past decade, various scholars and practicing attorneys had expressed concerns that the NYUCC was outdated. In response to such…
A bankruptcy remote entity is a special-purpose vehicle (or special purpose entity) (“SPV”) that is formed to hold a defined group of assets and to protect them from being administered as property of a bankruptcy estate. See Paloian v. LaSalle Bank Nat’l Assn (In re Doctors Hospital of Hyde Park, Inc.), 507 B.R. 558, 701, 702 (N.D. Ill. 2013). Bankruptcy remote entities are intended to separate the credit quality of assets upon which financing is…
The Pennsylvania Legislature enacted extensive changes to Title 56 of the Decedents, Estates and Fiduciaries Code affecting powers of attorney, effective as of January 1, 2015. The amendments create a number of issues for creditors in commercial transactions and individuals and businesses engaging in the transfer of equity interests, bonds or other assets of a business. The general rules applicable to execution of a power of attorney require, in part, that the power of attorney…
In Pontiac General Employees Retirement System v. Ballantine, et al., the Delaware Chancery Court refused to dismiss a claim against a lender for aiding and abetting a breach of fiduciary duty by the borrower’s directors. The claim was based on a “dead hand proxy put” provision in the credit agreement, which defined “continuing directors” – for purposes of determining whether there had been “change in control” – to exclude any director nominated in connection with,…
Private funds often seek subscription facilities for short term bridging of capital calls in order to, among other things, avoid the need to call capital in advance of closing an investment and backstop late capital call proceeds from the fund’s limited partners.  As collateral, lenders providing such facilities receive a security interest in investors’ capital commitments, capital contributions and the general partner’s right to make capital calls on the investors and enforce payment thereof.  A…
Banks play an important business role in the physical commodities sector by providing the much needed access to capital and related risk management, including through: • extension of credit; • project finance; • market making and liquidity; • risk management and hedging; and • fostering competition. These services are especially important to small and medium-sized companies that do not have the in-house cash flows, expertise or risk management capabilities of their larger competitors.…
Loan agreements and bond indentures often contain “make-whole” provisions, which provide yield protection to lenders and investors in the event of a repayment prior to maturity. They accomplish this by requiring the borrower to pay a premium for pre-payment of a loan. This allows lenders to lock-in a guaranteed rate of return when they agree to provide financing. Borrowers also benefit since the yield protection allows lenders to offer lower interest rates or fees than…