The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Bankers win court battle for the future of lending

A recent UK court judgment has stopped minority lenders blocking a workout because it is not in their interests. Rob Mannix explains why the ruling is good news for the banking industry

On the face of it, Redwood Master Fund has every right to be upset. An English court has forced it and other minority investors to accept a restructuring deal struck between their fellow lenders and a troubled borrower, Dutch cable company United Pan-European Communications (UPC).

The deal would force Redwood and the other funds to lend ?30 million to UPC so it could pay back other creditors. It is a decision that the funds' lawyer, Tony Horspool of Cadwalader Wickersham&Taft, calls "taking money out of the pockets of one set of lenders and putting it into the pockets of others".

In fact, a win for the funds would have frozen the syndicated lending market. If the judge had sided with minority investors on this case, any disgruntled creditor could have held its fellow bankers to ransom whenever a loan's terms needed tweaking. On complicated deals, waivers and consents are negotiated frequently. And, at any time, one or more lenders might wish they could exit a deal.

Renegotiations became necessary for UPC after its parent defaulted on debt repayments. This triggered a credit event on UPC's loans, to which Redwood and other funds had bought exposure. They had bought about ?65 million of the A tranche of UPC's debt in the secondary market - a part of the company's debt facility that had not yet been drawn.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree