ByrneWallace LLP
3 Contributions by ByrneWallace LLP Experts
PRACTICE NOTES
Guarantees are commonly deployed in banking arrangements as a type of security for a debt obligation. In these situations, they comprise a contractual commitment by which one party (the guarantor) undertakes to be responsible for the obligations of another (the principal) that are owed to a third party. They do not confer proprietary rights over property. In this sense, guarantees are regarded as quasi-security. This Practice Note considers:
the core legal features of guarantees
how guarantees operate in financing transactions
why lenders favour documents that combine a guarantee with an indemnity
which obligations are typically covered-duties under a particular deal or on an ‘all monies’ basis?
whose liabilities are usually supported in finance transactions
the application and scope of limited guarantees, and
why lenders must understand guarantor rights and available guarantor protections
This Practice Note does not address on demand
Ireland - Banking & Financial Services
PRACTICE NOTES
In cross-border finance transactions, legal opinions are almost always required. They typically operate as a condition precedent to funding or to the execution of the finance documents. Their function is to inform the addressee about the legal risks inherent in the deal. Although they feature across numerous forms of financing, they can be difficult to handle from both legal and practical angles and should, therefore, be discussed and settled as early as possible in the process.
This Practice Note explains:
what legal opinions are
when they are used
who can rely on them
what they cover
how legal opinions are used in cross-border transactions
the structure of a typical opinion letter
For more information, see Practice Notes: Conditions precedent; Ireland-How to instruct and manage local counsel in a finance transaction; and How to draft and review legal opinions in loan transactions. For an example of an Irish law legal opinion, see
Ireland - Banking & Financial Services
PRECEDENTS
Letter of non-crystallisation
This precedent letter is used where a buyer acquires a business/asset subject to a floating charge (the Charged Asset), or a lender takes a second floating charge. It confirms the charge has not crystallised, no steps have been taken to crystallise it, and the chargee consents to either a sale or a second floating charge.
Under a floating charge, the chargor may in the ordinary course sell the asset or grant further security (unless restricted) until crystallisation. Once crystallised, the charge becomes fixed and the chargor loses that freedom. Buyers/new lenders should seek confirmation that crystallisation has not occurred. A letter may come from the chargee or chargor, but a chargee’s letter is preferable; though not obliged, chargees usually provide it. Buyers favour unlimited confirmation; chargees often insist on a knowledge
Ireland - Banking & Financial Services
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