Event of default (Insolvency) meaning

Pagden (as Security Trustee under a Security and Intercreditor Deed dated 24 December 2015) and others v Ridgley [2025] EWHC 2674 (Ch) What was the background? Orthios Eco Parks (Anglesey) Ltd and Orthios Power (Anglesey) Ltd (together, the Companies) sat within the Orthios Group. The group obtained capital from Cresta Energy Ltd (Cresta), which put £66m into bonds issued via MPB Eco Parks Ltd (MPB), and from between 300 and 400 retail investors who subscribed £36.4m of bonds. Those bonds were backed by fixed and floating charges over land granted by the Companies, with all such security vested in Mr Colin, as security trustee, under a Security Trust Deed. On 25 March 2022, after an event of default, Mr Colin used his qualifying floating charge to appoint Mr Ridgley as administrator of the Companies. He did so without consulting Cresta beforehand. In late April 2022, Mr Colin executed a letter authorising Mr Ridgley’s sale of the land subject to the fixed charges and agreeing the following: remuneration to Mr...

Banking & Finance—November 2025 case round-up Westfield Park Ltd v Harworth Estates Investments Ltd [2025] EWCA Civ 1374 Interpretation of contract—deferred consideration clause The Court of Appeal upheld Westfield Park Ltd’s appeal against HHJ Klein’s ruling on the correct construction of an agreement dated 14 October 2021 (the ‘Agreement’) for the sale and purchase of York Holiday Park Development. The key question was whether the judge at first instance had properly read a deferred consideration provision in Schedule 4 as triggering an additional payment from Westfield to Harworth Estates Investments Ltd when the Coal Authority confirmed that static caravans could be located within a ‘Zone of Influence’ surrounding two mineshafts. The appellate court criticised the departure from the contractual wording in favour of a purposive construction of the relevant terms. It held that the judge failed to begin with the objective, natural meaning of the Agreement and did not correctly apply the established principles of contractual interpretation reaffirmed in Arnold v Britton and Wood v Capita Insurance...

Banking & Finance 2024 case round up Force majeure—shipping contract—reasonable endeavours RTI Ltd (Respondent) v MUR Shipping BV (Appellant) [2024] UKSC 18 This Supreme Court decision examines how a force majeure clause in a shipping contract between MUR Shipping BV (MUR) and RTI Ltd (RTI) should be interpreted. Such clauses excuse a party from performing when specified events outside the parties’ reasonable control (acts of God) occur. They frequently contain a ‘reasonable endeavours’ proviso, which prevents a party from invoking force majeure if the consequences could be averted by taking reasonable steps. The appeal turned on whether those reasonable endeavours required the party seeking to rely on force majeure to accept an offer of performance that did not match the contract terms. In this instance, the suggested alternative was payment in euros rather than US dollars. The Supreme Court unanimously allowed the appeal, ruling that MUR’s refusal to accept RTI’s non-contractual proposal did not amount to a failure to exercise reasonable endeavours...

This Practice Note looks at: the principal features of loan to value (LTV) covenants in secured lending transactions possible issues with calling an event of default arising from a LTV covenant breach potential challenges to an event of default based on a LTV covenant breach remedying a LTV covenant breach the impact of the economy on LTV covenant breaches LTV covenants are a vital element of risk management in secured lending. An LTV covenant is a common financial covenant that requires the outstanding principal of a loan, expressed as a percentage of the value of the security charged in favour of a lender, to stay below a specified threshold for the life of the loan. This gives lenders a means to monitor and protect the strength of their security over time. For borrowers, grasping and negotiating these covenants is key to achieving favourable loan terms and steering clear of the pitfalls that can arise from a breach. Although a...

JCT contracts include comprehensive rules on termination, explaining the grounds on which parties may end matters and the effects that follow. Under these forms, it is the Contractor’s employment that is brought to an end, rather than the contract itself. This distinction is intended to ensure the contract’s post-termination provisions remain operative after termination. This Practice Note addresses the termination clauses in the JCT Standard Building Contract (SBC) With Quantities 2011, 2016 and 2024 editions, found in section 8 of those agreements. Equivalent mechanisms also appear in other JCT contracts. It should be read in conjunction with Practice Note: Termination of a construction contract. Termination should always be approached with great care. If a termination is wrongful, or if the prescribed procedures are not followed precisely, the attempt to terminate may amount to a repudiatory breach of contract by the party seeking to do so. Furthermore, where the other party challenges the purported termination, the terminating party may find itself drawn into an expensive dispute...

Many of the usual events of default for a typical syndicated loan facility will likewise apply, in some form, to a real estate finance transaction. For information about those events of default, including what events of default are and why they are used, see Practice Note: Events of default. This Practice Note considers the kinds of additional events of default commonly seen in real estate finance investment and development transactions. Purpose of events of default Instead of relying on general contract law for a remedy where the borrower breaches the loan agreement, most facility agreements incorporate a mechanism by which a lender may, if it chooses, take action when the borrower breaches the loan agreement or when certain other events occur. The events that permit the lender to act are usually set out expressly in the facility agreement and are referred to as 'events of default'. If an event of default is continuing, the lender will ordinarily be permitted to take any or all of the following...

[ To be produced on the headed paper of the lender issuing the demand ] To: [ Insert name of individual and/or position ] [ insert name of the Borrower or other relevant entity ] [ insert address ] [ insert facsimile/fax number ] [ insert email address ] [ copy [ specify to whom ] ] Sent by [ Hand OR First class post OR Facsimile OR Email ] [ Insert date of letter ] Letter of demand Facility Agreement dated [ insert date ] between [ insert name of lender ] (the Lender) and [ name of borrower ] (the Borrower) (the Facility Agreement). [ Debenture ] dated [ insert date ] executed by the Borrower in favour of the Lender (the Debenture). Unless stated otherwise, terms and expressions defined in the Facility Agreement bear the same meanings in this letter of demand. References to “you” mean the Borrower, and references...

This Agreement is entered into on [ insert day and month ] 20[ insert year ] Parties The Lenders (as identified in Schedule 1) (the Lenders); and [ insert name of debtor company ], a company incorporated in [ insert country eg England and Wales ] under number [ insert registered number ] whose registered office is at [ insert address ] (the Company); (Each of the Lenders and the Company is a Party and, collectively, the Lenders and the Company are the Parties). Recitals The Parties have executed the following Finance Documents: [ insert list of finance documents ]. As at the Commencement Date, the amounts [ listed in OR calculated in accordance with Schedule 2 ] are owed under the Finance Documents. The Lenders consent to a moratorium on exercising their rights arising from any Event of Default or any breach of covenant under the Finance Documents. The Company will not be obliged...

[ To be produced on the company’s headed paper ] To: [ Name and postal details of the lender who is to appoint the receiver ] [ insert lender’s name ] [ insert postal address ] [ insert fax number ] [ insert email address ] [ copy: [ state to whom ] ] VIA [ HAND DELIVERY OR FIRST-CLASS POST OR FACSIMILE OR EMAIL ] Dear [ insert organisation’s name ] Invitation to...