UK Law and Practice Contributed by: Fergus Wheeler, Paul Yin, Tracy Liu and Medha Vikram, Latham & Watkins
5.2 Floating Charges and/or Similar Security Interests Floating charges over all current and future assets of an English company are commonly granted. Private credit lenders typically require a robust security package with “fixed” security over several asset classes and “floating” security over all or substantially all assets. 5.3 Downstream, Upstream and Cross- Stream Guarantees Downstream, upstream and cross-stream guar - antees may be provided by English companies, subject to having the necessary power, capacity and corporate benefit. For upstream and cross-stream guarantees, directors must assess the corporate benefit of granting these guarantees and the guarantors’ financial standing. They will often seek share - holder approval to ensure alignment with com - pany interests. In private credit deals, term and revolving facili - ties and ancillary facilities under the RCF, typi - cally share a common security and guarantee package. This can include permitted secured hedging if hedge counterparties join the inter - creditor agreement. A notable feature of many private credit deals is the super senior ranking of the RCF and certain permitted hedging. This arrangement allows RCF lenders and hedge counterparties to receive security enforcement proceeds before term lenders. This is a hallmark of the UK and European private credit markets. This structure is crucial for attracting RCF lenders, as most private credit funds are not equipped to offer revolving loans and associated clearing facilities.
5.4 Restrictions on the Target Under the Companies Act 2006 (the “CA06”), public limited companies and their subsidiar - ies (public limited company or otherwise) are restricted from providing financial assistance for acquiring or refinancing the acquisition of shares in that public limited company, whether listed or unlisted. This includes guarantees, security, indemnities and any other assistance from a tar - get company or its UK subsidiaries. Addition - ally, a UK public company cannot offer financial assistance for acquiring shares in its UK limited parent company. Since this prohibition does not apply to private limited companies, lenders financing acqui - sitions of public limited companies typically require relevant public companies in the target group to re-register as private companies after the acquisition is completed and before provid - ing any financial assistance. 5.5 Other Restrictions Third-Party Consents Third-party consents are necessary when there are restrictions on charging or assigning assets such as contractual rights, receivables or leasehold property. For small and medium- sized enterprises, the Business Contract Terms (Assignment of Receivables) Regulations 2018 facilitate access to financing by allowing the assignment of receivables governed by English law to finance providers and nullifying any terms that restrict these assignments in business con - tracts. National Security and Investment Act The National Security and Investment Act 2021 (the “NSIA”) grants the UK government exten - sive powers to scrutinise acquisitions that may pose national security risks. The NSIA impacts secured creditors taking or enforcing security
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