The Wealth Finance Brief - 1 October 2014
Locations
This quarter we have prepared a guide to "Lending to law firms" which considers the particular issues which lenders active in this area need to take into account.
Next we turn to the enforcement of the loan documents. We analyse a recent High Court case which looked at a lender's right to take possession of a residential property and whether this is affected by the lender's compliance with regulatory rules (here, the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB)). In our second article on the topic of enforcement, we seek to underline the importance to lenders in spending time considering the type of jurisdiction clause (litigation or arbitration) which is best suited to the particular transaction when drafting the loan agreement.
Finally, we have included an in depth guide to "Lending to limited partnerships against capital calls".
Lending to law firms
When lending to law firms there are a number of matters that lenders need to consider. As most law firms are structured as limited liability partnerships, some of the considerations are common to lending to limited liability partnerships generally. However there are also additional regulatory and other considerations associated with the borrowers being in the business of providing legal services which need to be borne in mind when lending to a law firm. This briefing paper seeks to outline and explain the exigencies associated with lending to law firms.
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A Lender's Right to Take Possession of Residential Property
The High Court recently confirmed, in Thakker & another v Northern Rock plc, that a lender's failure to comply with MCOB would not prevent it from taking possession of the residential property. This article considers whether MCOB still offers any meaningful protection to borrowers who are in arrears, or whether lenders now have free reign.
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Litigation or Arbitration?
The jurisdiction or arbitration clause is often seen as a boilerplate provision – no more than a "footnote" to the agreement, and far less important than the commercial terms of a deal. However, in the event of a dispute, this short clause tagged on to the end of an agreement can have a significant effect on the strategy, timing and legal costs in any dispute.
This note sets out a brief summary of the different types of jurisdiction clauses that may be included in an agreement and the considerations to bear in mind when choosing litigation or arbitration in a dispute resolution clause.
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Lending to Limited Partnerships against Capital Calls
Private equity funds requiring money for investments frequently turn to lenders to bridge the gap between the date when the investment needs to be made and the date of the next scheduled capital call on its limited partners. These equity bridge or capital call facilities are often secured on the fund's limited partners' commitments to make capital contributions. This article sets out how these types of loans and the security therefor are structured and the special issues which need to be considered by lenders.
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