Welcome to the second of three joint editions of On Target and Collateral. Our April edition covered the key grounds on which directors of cash-strapped companies could be held liable for their or the company’s acts, and in this newsletter we focus on five aspects of a company’s third party credit facilities (term loans, revolving credit facilities etc.) that could now, or soon, cause concern in light of the hardships caused by COVID-19. Individual loan terms and circumstances will vary so this information below is not intended to be exhaustive, and (of course!) we advise seeking professional advice. The next and final edition in the series will consider how a borrower might approach negotiations with its lender to refinance or relax the terms of its facilities.
1. Can the company pay?
Borrowers need to quickly work out whether their cash flows are affected to such an extent that they will be unable to meet scheduled interest payments and repayments of principal.
MJ Hudson works with clients in the fields of law, international administration, fund management, investment advisory, and IR and marketing, across both alternative and traditional asset classes.Gresham House Strategic PLC (LON:GHS) has a 1.3% ownership of MJ Hudson as of June 2018.
