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Finance & security

Corporate & governance

Business financing needs documentation that reflects cash flow, security and future transactions. We advise borrowers, shareholders and investors on loans, shareholder funding, guarantees and related corporate issues.

Scope of our advice

Key terms include financial covenants, information undertakings, permitted distributions, security, events of default and intercreditor arrangements. The enforceability and priority of security depend on the asset and jurisdiction.

What needs attention

Group guarantees and upstream security require a corporate-benefit and capital-maintenance analysis. Distress also changes the risk associated with repayment, collateral and shareholder loans.

Funding terms, covenants and security

Finance documents should reflect the purpose of the borrowing, repayment sources and the wider capital structure. We review facilities, shareholder loans, guarantees and security alongside existing restrictions on additional debt or asset disposals. Financial covenants, information undertakings and default triggers should be tested against realistic business scenarios. A technical breach can become a serious negotiating problem even where payments remain current. For group financing, the benefit to each entity and applicable corporate restrictions require separate consideration.

How the legal work is organised

The legal workstream follows signing, conditions precedent, drawdown and ongoing compliance. Security must be matched to the asset and the relevant creation or perfection requirements. Intercreditor arrangements may be needed where several lenders rely on the same business. During refinancing, release of old security and creation of new security must fit the payment sequence. If performance deteriorates, we assess waivers, amendments, standstills and enforcement exposure, while keeping insolvency duties distinct from the contractual discussion with lenders.

Four practical examples

Illustrative scenarios explaining typical legal issues; these are not statements about specific client mandates.

Acquisition finance

A buyer needs debt funding alongside equity. We coordinate financing conditions with the purchase agreement so completion obligations remain consistent.

Practical approach. The acquisition timetable must match the facility conditions and required security. Confirm who provides equity, when funds become available and what happens if completion is delayed or a consent remains outstanding.

Covenant breach

A borrower expects to miss a financial ratio. We review notification and waiver options before a default escalates.

Practical approach. The covenant review should model seasonal fluctuations and permitted adjustments. A clear reporting process helps management identify a likely breach early enough to discuss a waiver before a formal default occurs.

Parent guarantee

A subsidiary is asked to secure a parent’s borrowing. We assess corporate authority, capital protection and appropriate limitations.

Practical approach. A guarantee should be assessed in the context of the guarantor’s position, authority and existing obligations. The commercial relationship between group companies does not replace the legal analysis for each entity.

Shareholder bridge loan

Owners fund a short-term liquidity gap. We document terms and examine insolvency and repayment implications with restructuring advisers.

Practical approach. Document repayment, interest, ranking and any required subordination with specialist input. The shareholder relationship does not remove the need to examine corporate restrictions, distress duties and the treatment of the loan in a later transaction.

Preparing the first discussion

Prepare the financing and security documents, covenant calculations, current debt schedule, ownership chart and relevant board approvals. Identify assets already pledged, guarantees given to third parties and planned disposals or acquisitions. Explain the expected funding timetable and the effect of delay so that conditions precedent can be prioritised and checked before money is required.

Related expertise

Set up a German company · Shareholder agreements · Directors & board duties

Discuss your business matter

Tell us which parties and countries are involved, what you want to achieve and whether a deadline is approaching. We will clarify the scope, the appropriate legal team and the fee arrangements before work begins.

Contact our team