Asset Based Lending meaning

Links to useful intercreditor materials This table sets out the principal checks a junior lender should make when assessing a simple intercreditor agreement between senior secured lenders, junior secured lenders and unsecured subordinated creditors. It is designed for readers with limited familiarity with intercreditor arrangements. The table highlights the core, commonly encountered points in a straightforward secured bilateral corporate loan and does not attempt to capture every potential negotiation issue, nor matters arising in specialist or more complex deals such as those in the leverage finance market. What is reasonable will vary with the nature of the transaction, the identity of the lender and the parties’ relative bargaining power. For specialist intercreditor topics, see the materials referenced below... Introductory materials Practice Note: Introductory guide to Intercreditor Agreements, covering typical provisions found in intercreditor agreements. Practice Note: How to draft and negotiate intercreditor arrangements in loan transactions, offering introductory guidance on drafting and negotiation. Precedent: Intercreditor deed-single company, a precedent suitable for a straightforward...

Points to consider What is the most appropriate method of transfer? Consider: Think about whether you are transferring rights alone (eg drawn commitments) or also obligations (eg undrawn commitments). An assignment passes only rights, whereas a novation passes both rights and obligations. Novation is usually favoured for loan transfers because it conveys rights and duties together. If assignment is adopted, the obligations can be moved by novation. For more detail, see Practice Note: Transferring a loan by assignment. Whether consent can be obtained from the borrower? By law, an assignment does not require the counterparty’s consent. However, the facility agreement will often require borrower consent for an assignment, and for a novation as well. Sub-participation is sometimes used to transfer loans on syndicated transactions where borrower consent cannot be obtained. That said, some deals may still require borrower consent for sub-participation. Whether the intention is for the transfer to be kept confidential from...

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In this issue: Accountability, culture and social governance Prudential requirements Banks and mutuals Operational resilience Financial crime and sanctions Complaints, compensation and claims management Investigations, enforcement and discipline Markets and trading Dispute resolution for financial services lawyers Regulation of derivatives MiFID II Consumer credit, mortgage and home finance Crowdfunding Sustainable finance and ESG Regulation of insurance Payment services and systems Fintech and cryptoassets EEA Agreement Annex IX (Financial Services) Financial Services Enforcement Database Daily and weekly news alerts Intraday news alerts New and updated content Dates for your diary Accountability, culture and social governance Treasury Committee publishes summary of ‘Sexism in the City’ engagement event The Treasury Committee has issued a synopsis of the ‘Sexism in the City’ engagement session, which took place on 14 November 2023. Within its inquiry into the hurdles experienced by women in financial services, and...

The use of invoice discounting and factoring of receivables as business finance has expanded markedly in the UK over the past 25 years. Introduction to receivables purchase transactions Invoice discounting and factoring fall within receivables purchase arrangements under which a supplier of goods and/or services (often called the seller or the supplier) transfers, typically by way of assignment, debts owed to it by the purchaser of those goods and/or services (commonly referred to as the buyer or the account debtor), usually together with all associated rights. These receivables purchases are frequently completed at a discounted purchase price. That said, receivables can also be acquired for an amount equal to their face value, with the supplier paying the purchaser a purchase fee. For a variety of reasons, suppliers may opt to sell receivables (on a no recourse or limited recourse basis) in preference to borrowing...

Except where an exemption or relief applies, payments of: annual interest (or amounts that tax rules treat as annual interest), and that have a UK source must be made under deduction, with the payer required to withhold and account to HMRC for UK income tax at the basic rate (20%) or, from 6 April 2027, at the savings basic rate (22%) (for more detail, see Practice Note: UK withholding tax on yearly interest). This Practice Note describes the duty to deduct (and account to HMRC for) UK income tax from UK‑source annual interest as a withholding tax, even though it is in substance a mechanism for collecting UK income tax from the UK‑based payer rather than from the recipient who: is the beneficial owner of the income, and is likely to be based outside the UK For more information on the requirement to deduct UK income tax from UK‑source annual interest, see Practice Note: Administration...

Practice Note This Practice Note provides a concise outline of the principal legal considerations and discussion themes typically faced in practice when financial institutions assess whether to offer receivables purchase or invoice discounting facilities, or instead to advance a loan secured against the value of receivables. There are several reasons why suppliers might opt to sell receivables (on a no recourse or limited recourse basis) rather than borrow...