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Distressed Step-In as a Remedy for UK Lenders

This article first appeared in Corporate Rescue & Insolvency, December 2018.

Key points

  • Step-in is a versatile tool which gives a lender the right, in certain circumstances, to step-in to a contract between a borrower and its contractual counterparty, and to perform the borrower’s part of the bargain to keep the contract alive.
  • It can have much less impact on the actual project or development than the commencement of formal insolvency proceedings, thereby minimising loss.
  • Step-in won’t be right for all situations (or for all lenders) and, where there is distress, additional risk factors need to be brought in to a consideration of the lender’s options.

Introduction

Step-in is a self-help remedy. It is a creature of contract and, in a finance structure, gives lenders the right, in certain circumstances, to step-in to a contract between a borrower and its contractual counterparty, and perform the borrower’s part of

From Across the Pond: The BHS Saga Continues – Can a Company Voluntary Arrangement (CVA) Ever Permanently Vary the Terms of a Lease?

Editors’ Note:  The upcoming merger between Berwin Leighton Paisner and Bryan Cave will create a 1500 lawyer, fully integrated firm with best-in-class offices in the US, UK, Europe, Russia, Hong Kong, and the UAE.  The combined Firm, to be known as Bryan Cave Leighton Paisner LLP, will have particular strengths in real estate, financial services, litigation, and corporate practices.  Most importantly for followers of The Bankruptcy Cave, this merger will result in a cadre of restructuring professionals able to handle insolvency matters around the globe, with proven expertise in cross-border workouts, restructurings, and any other insolvency featuring international flavors.  We look forward to speaking with you any time on any insolvency matter that includes any cross-border implications.  

Article summary:

In Wright (and another) (as joint liquidators of SHB Realisations Ltd (formerly BHS Ltd) (in liquidation)) v Prudential Assurance Company Ltd, the court held that, when the BHS CVA terminated, the landlord was entitled to claim the full

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