HomeCase studiesBanks & financial institutionsDay-to-day supportFinding a commercial solution to balancing a creditor’s interests using permitted payment agreements

Why the client needed our help

Our client, a major independent receivables financier, was looking to ‘on-board’ a new customer that wanted to retain an existing loan arrangement that involved it making regular payments to a lender.

Our client was concerned that the continuing payments to the other creditor might have an adverse impact on the liquidity of the company.  They wished to agree a formula with their client and the other lender that would determine when the company would be permitted to make payments to the lender in satisfaction of its obligations under the other facility without compromising our client’s interests under the new invoice finance facility.

How we helped

We reviewed the terms of the company’s existing loan facility and advised our client on the payment terms that could potentially conflict with the provisions of our client’s proposed finance and security documents with the company.

We then negotiated with the company’s solicitors the amendments that would be necessary to the loan agreement to incorporate an agreed permitted payment formula specified by our client. We prepared a letter between our client and the new customer in which our client consented to permitted payments on the agreed terms. We also amended our client’s standard security documents to provide for the permitted payments within the scope of the debenture and integrated the discharge of these additional obligations into the ‘termination events’ in respect of the facility.

The outcome

This commercial solution meant that our client was able to take on a new customer and ensure the existing creditor would continue to receive payments whilst ring fencing the liquidity of the business.

Key contacts

Chris Willison

Chris Willison

Partner

Sally Bradshaw

Sally Bradshaw

Senior Associate

Kieran Cummins

Kieran Cummins

Solicitor

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