Waterfall provision meaning

Mayfair Capital Residential 2 LLP v Reim Katch Securities Ltd [2024] EWHC 1920 (Ch) What are the practical implications of this case? In Mayfair Capital, the court concluded that an intercreditor deed permitted ongoing ‘permitted payments’ to the junior lender, notwithstanding the appointment of a receiver. The application of proceeds clause, which directs amounts received by the lenders to be applied first in discharge of the senior debt and then the junior debt, was held, by necessary implication, to operate subject to the permitted payments provision. Accordingly, the permitted payments regime prevailed over that clause to this extent. The decision is a helpful reminder to practitioners to ensure intercreditor agreements and deeds of priority contain express payment stops (where this is commercially agreed). Further, where the parties intend the way in which proceeds are applied to differ before and after enforcement, this should be made clear within the agreement. What was the background? The focus of the dispute was the proper interpretation of particular provisions in...

What are CCPs and what do they do? A central counterparty (CCP) is a form of financial institution, often called a clearing house, that enables the clearing of both over-the-counter (OTC) derivatives and exchange-traded derivatives (ETDs). CCPs are recognised as financial market infrastructures (FMIs). A derivative is a financial instrument whose value is set by reference to, and therefore derived from, an underlying asset, index, rate, reference point or risk (known as the underlying asset or simply the underlying). Derivatives are bi-lateral agreements that shift some or all of the risk and reward linked to the underlying from one party to another, without any immediate delivery of the underlying item. The terms of OTC derivatives are negotiated directly between the counterparties, or in certain instances arranged via a broker. OTC derivatives are distinct from derivatives, typically futures or options, that are traded on public exchanges (called exchange-traded derivatives or ETDs). For ETDs, contract terms are defined by the exchanges on which they trade, not by the contracting parties. ETDs...

This Practice Note traces differences between European Market Infrastructure Regulation (EU) 648/2012 (EU EMIR) and Assimilated Regulation (EU) 648/2012 (UK EMIR). How to use this Practice Note Use this Practice Note as a navigational aid when reviewing Assimilated Regulation (EU) 648/2012 (UK EMIR), by comparing it with the parallel provisions in Regulation (EU) 648/2012 (EU EMIR). Set out below are links to all Articles and Annexes in UK EMIR and EU EMIR respectively. Each section provides: the relevant Articles and Annexes as they currently stand, including: the latest changes made, when they were made, and details of the implementing/amending/repealing legislation proposed reforms to specified Articles a brief summary of points of divergence (ie how the relevant Article or Annex has evolved in the UK and/or the EU since 31 December 2020, being the end of the Brexit transition period) The degree of variance between the regimes is signposted as...

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...

1 Model Articles 1.1 Save to the extent that these Articles amend, disapply or conflict with them, the Model Articles govern the Company. Subject to any such amendments, disapplications or conflicts, the Model Articles, together with these Articles, comprise the Company’s articles of association, to the exclusion of any other articles or regulations contained in any statute, statutory instrument or other subordinate legislation. 1.2 The following provisions of the Model Articles shall have no effect in relation to the Company: 11(2) (quorum for directors’ meetings), 12 (chairing of directors’ meetings), 13 (casting vote), 14(1)–(5) (conflicts of interest), 21 (all shares to be fully paid up), 26(5) (share transfers), 30(5)–(7) (procedure for declaring dividends), 39 (chairing general meetings), 42 (voting: general), 44(2) (poll votes), 50 (no right to inspect accounts and other records), 51 (provision for employees on cessation of business), 52 (indemnity) and 53 (insurance)...