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.

Courts a warning to creditors everywhere

As more and more loans are closed without financial covenants in Europe, the bankruptcy of UK retailer Courts is a warning to lenders who abandon covenants too hastily.

The furniture seller was both forced into administration by its banks, RBS and Bank of Nova Scotia, this week and told that its profitable overseas businesses would not escape due to covenants included in a renegotiated credit facility closed in June.

As is reported in CF's December issue, which includes the inaugural loan markets survey, these covenants are in contrast to the majority of European corporates that are winning loans from their banks that exclude all financial covenants.

Courts had announced that its operations in Jamaica, Barbados, Mauritius, Singapore and Malaysia would avoid administration. But the terms of its credit facility state that the retailer exchanged security over its equity interests abroad in June in return for an extra £30 million in borrowing lines.

Without the more profitable foreign businesses, the banks would have recovered little from the debts Courts owes them. As it is, they will win control over majority stakes ranging from 50.1% to 87.7% in the foreign operations.

There are 22 other lenders in the syndicate group other than RBS and Bank of Nova Scotia.

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.


Unlimited access to and

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


Unlimited access to and, 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


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