The Finance Brief - 9 April 2013

Another bumper edition of The Finance Brief this quarter.

It is unlikely to have escaped your notice that the new Companies House charge registration regime was introduced last week – we set out below a summary of the main practical points to be aware of.

FACTA continues to be in the minds of lenders, and we analyse in our second article the FATCA related issues for those in the primary market.

Two recent cases caught our attention: Cavendish Square Holdings BV v Makdessi which considers the approach a court will take when deciding if a clause is penal, we discuss this with a particular focus on default interest clauses in loan agreements. Cukorova Finance International Limited v Alfa Telecom Turkey Ltd looking at the remedy of appropriation and also at the material adverse effect event of default provision in a loan agreement.

Finally, we add to our stock of briefing guides with an updated guide to taking security over art and a new guide to margin lending.

Hannah Salton, Editor

New regime for registering charges at Companies House

As of last Saturday (6 April 2013), the new Companies House charge registration regime came into effect. Here we list the key changes that the new regime brings about.

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FACTA: better news for Lenders

This note outlines some of the issues lenders in the UK primary market need to consider in relation to FACTA.

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Is your default interest clause enforceable?

The vast majority of loan agreements will contain a default interest provision which provides a contractual sanction against non-payment of a sum of money. Care must be taken however in the lender's choice of default rate and the manner in which it becomes payable, otherwise such provision may risk being invalid as a penalty. Recent case law has confirmed the new approach which a court will adopt when considering whether a particular provision can be regarded as a penalty (and will consequently be void and unenforceable).

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Appropriation of shares and relief from forfeiture

The saga concerning control of the Cukurova group – and hence ultimately of a publicly quoted Turkish cell phone network provider – returned to the Privy Council in the case of Cukorova Finance International Limited and Cukurova Holding AS v Alfa Telecom Turkey Ltd UKPC 2, resulting in a decision of considerable interest on the remedy of appropriation, and also on a material adverse change event of default.

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Security over Art: an introduction

A number of particular issues and difficulties arise for lenders in taking security over art as opposed to other assets, especially in relation to art owned by natural persons. This briefing paper is a general introduction to the subject, and highlights some traps for the unwary.

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Margin lending: a brief introduction

This article sets out a brief summary of a typical margin loan structure, the risks to borrowers and lenders involved in margin lending, steps that can be taken to minimise such risks and some applicable legal considerations for lenders offering margin loans as part of their services.