Dentons

International Top 30 position: 4

Top tips for financiers: dealing with a defaulting borrower

The Dentons restructuring, insolvency and bankruptcy group considers the legal, commercial and practical issues. These include the borrower breaching or being about to breach its financial covenants or overdraft limits or suddenly requesting new facilities or an extended repayment timetable. The borrower may be under increased creditor pressure (including statutory demands or other debt collection or winding-up procedures) or subject to litigation, insurance claims or rent reviews, diverting management time away from the business. Management may be unresponsive to your questions or reluctant to share information with you.

Other warning signs include the borrower: losing a key customer or supplier; suddenly losing or changing its management team, in particular the finance director; having a sudden change of auditors or trouble signing off its accounts; delivering information late; asking its bankers to send cheques for round amounts or to postpone/push forward certain payments (in particular BACS wage runs); or deferring any planned or regular capital expenditure.

Also, in the current banking climate, if a borrower with a previously good working relationship and without warning makes a spurious or unmeritorious complaint about an interest rate hedging product, it could be an attempt to draw attention away from more fundamental problems with its financial position…

Click on the link below to read the rest of the Dentons briefing.

Sign in or Register to continue reading this article

Sign in

Register

It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer

 

Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.

 

Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.

 

Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from Dentons

View more briefings from Dentons

Analysis from The Lawyer

View more analysis from The Lawyer

Overview

1 Fleet Place
London
EC4M 7RA
UK
http://www.dentons.com/

Turnover (€m): 209.5
Lawyers: 760
Partners: 183
Jurisdiction: Europe

Jobs