Legal challenges

All over Europe, law firms are ramping up their insolvency and restructuring practices and one contact provided one of the few positive job-related stories, as he was moving not towards a gardening leave, but joining a restructuring-related firm. The current increase in covenant breaches (both "technical breaches" and "real breaches") opens up a whole field of activity for lawyers; negotiating new financing structures and making use of all the covenant-light provisions that were set down in contracts closed in brighter times. A few admitted that much of the paperwork had been rushed through during the last few years and as these credits reach maturity, these contracts are being carefully re-examined. Any mistakes made in the past can potentially have unforgiving consequences now.

Financial negotiations are now hairier than ever, especially as most clauses to address problematic parties had assumed it would be the non-banking parties in dire straits - so what to do when the lenders, instead of the borrowers, are in trouble is not accounted for whatsoever in the documentation. For example, what do you do when you have an insolvent bank in your syndicate and their administrators hold up talks, just as you are trying to expediently maximise value in a troubled portfolio company? This presents a lot of interesting challenges to law practitioners.

Yours sincerely,

Mareen Goebel

Editor, Deutsche unquote"

Tel: +44 20 7004 7462

mareen.goebel@incisivemedia.com

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