UK High Court: Promise not to enforce covenant is good consideration for a loan

In the case of McDonagh v Bank of Scotland Plc & Others, the High Court considered whether a loan agreement which had been entered into was unenforceable for lack of consideration.

The Court held that the lender's binding commitment not to treat the borrower as being in default of the loan-to-value covenant in the first loan agreement constituted valuable consideration for the second loan agreement.

UK High Court holds secured lender not under a duty of rationality in enforcing full repayment of a loan Land Registry updates guidance on execution of deeds by LLPs

In UBS AG v Rose Capital Ventures Ltd, the High Court considered whether a duty of rationality, where a party must exercise contractual discretion in good faith and not arbitrarily or capriciously, should be implied into a mortgage where the lender had an absolute discretion to demand full repayment of a loan.

Update to REF documents

We have produced a mezzanine mark-up of a senior facility agreement, for use on REF investment transactions which anticipate both a senior and mezzanine loan being advanced.

In addition, we have also published a separate, additional, senior REF investment facility agreement template (with an accompanying PDF to show how it differs from the original LMA REF investment facility agreement). The mezzanine mark-up contained in the guide is then a mark-up of the clean senior facility agreement.

It is hoped that the production of these documents will make the suite of REF documents for a senior/mezzanine transaction more user friendly.

Finally, we have amended the REF financial covenants cure rider to take account of the fact that mezzanine lenders may be given the right to cure senior financial covenant breaches by way of a mezzanine loan.