Guarantor coverage meaning

In this issue: Guarantees Sustainable finance Debt capital markets Derivatives No Weekly Highlights on 24 April 2025 Daily and weekly news alerts New and updated content Useful information Guarantees Appealing guarantees (Jones v City Electrical Factors Ltd) The High Court dismissed an appeal from a County Court judgment that held a guarantor personally responsible for debts of about £190,000. In doing so, the court clarified when a ‘conditional payment obligation’ can amount to a ‘liquidated sum’, how such a liability engages section 267 of the Insolvency Act 1986, and the broader approach to construing commercial contract terms. This ruling, together with its analysis, is of clear significance for directors, liquidators and legal practitioners dealing with the drafting of guarantees and the robust enforcement of personal guarantees. For further insight, see News Analysis: Appealing guarantees (Jones v City Electrical Factors Ltd), by Stephen Alexander and Benjamin Meggitt-Smith of Mourant Ozannes (Jersey) LLP...

This glossary sets out many of the expressions commonly used in the leveraged finance market. Words appearing in the definitions in bold are defined elsewhere in this glossary. For further banking terminology, please refer to the main Banking & Finance Glossary... Acquisition finance glossary—A Acceleration Acceleration is the formal action taken by the agent, on the instructions of the majority lenders, following an event of default, such as making a demand for early repayment of the loan. See Practice Note: Accelerating a loan for more information... Accordion feature/accordion facility An accordion, also called an incremental debt feature, is a mechanism in the facilities agreement that, provided specified conditions are satisfied (for example, pro forma compliance with a leverage test), permits those lenders under the facilities agreement who wish to do so to advance additional debt. The terms for that extra debt are typically captured in an increase notice. This accordion or incremental debt flexibility is different from structural adjustment, which usually requires the majority consent...

This Practice Note outlines key aspects of a documentary 'relaxation' or 'release' clause, commonly included in leveraged buy-out (LBO) facility agreements. It also considers: the most frequently encountered trigger conditions common ways of easing requirements within the facility agreement, and particular points to address when negotiating this clause This Practice Note assumes a degree of familiarity with leveraged finance structures and documentation. For introductory material, see Practice Notes: Introductory guide to acquisition finance and Introductory guide to leveraged finance facilities agreements. The Glossary of acquisition finance terms and jargon may also be useful. Background Traditionally, LBO facility agreements have placed strict limits on group activities and imposed rigorous mandatory prepayment obligations, reflecting high leverage. Private equity sponsors often contend that, while controls are appropriate when the balance sheet carries significant leverage, once the group has materially deleveraged, such tight constraints become unnecessary. Deleveraging can occur through: a combination of earnings before interest, taxes, depreciation and amortisation (EBITDA)...

This glossary sets out numerous expressions regularly encountered in the restructuring & insolvency sphere. Words shown in bold within definitions are themselves explained in other entries in this glossary as well. A Article X The MLIJ contains a single provision named Article X, aimed at jurisdictions that have already implemented the MLCBI, like England, or are weighing its adoption. Article X states: ‘Not withstanding any prior interpretation to the contrary, the relief available under [insert a cross-reference to the legislation of this State enacting Article 21 of the UNCITRAL Model Law on Cross-Border Insolvency] includes recognition and enforcement of a judgment’ (see Practice Note: UNCITRAL model law on recognition and enforcement of insolvency-related judgments (MLIJ): Article X). Asset-backed security (ABS) A form of security anchored by asset pools, for example loans, leases, and credit card receivables. Assimilated law From 1 January 2024, ‘retained law’ has been retitled ‘assimilated law’. The body of domestic law originally arising from EU obligations, created by the European...