Emma Hopkinson explores the key restrictions in finance documents which can impact day-to-day on your business and what to do if you breach these.

1. Key restrictions in finance documents
In house lawyers forum – autumn 2013

2. • key restrictions in finance documents
which can impact day-to-day on your
business and what to do if you breach
these

3. • key messages
• key terms / restrictions in finance
documents which can impact day-to-day
on your businesses
• how to go about getting consent
• what should you do if you breach?
• different types of finance and key issues

4. • do not breach! No longer ‘the good old
days’
• be transparent
• trust between bank and borrower must
be preserved
• speak up early

5. Key terms / restrictions in finance
documents
• check which companies are within the
bank’s control
• early repayment – hedging close out costs
and prepayment fees
• change of control – are shareholders
locked in?

6. Key terms / restrictions in finance
documents
• cash out restrictions
• asset out restrictions
• third party borrowings restrictions
• acquisition / JV restrictions

7. • directors – remuneration, bonus, etc.
• restrictions on changes to senior
management
• financial covenants
• restrictions on changes to financial
info/reporting
• restrictions on changes to deal docs

8. • good practice to review finance
document once a year to see if any
consents will be needed
• timing is key to ensure bank can comply
with internal processes
• if significant issue – assume formal
process and credit sanction will be
needed
• bank’s consent should be provided in
writing

9. • should you own up or keep quiet?

10. • invoice financing
– deed of priority
– assignability of invoices
• asset finance
– will need waiver under bank’s debenture

11. • do not breach! No longer ‘the good old
days’
• be transparent
• trust between bank and borrower must
be preserved
• speak up early

12. Get in touch if you have any questions or
would like further information.
t +(0)121 237 3944
e emma.hopkinson@brownejacobson.com