Banking sector distress call

We advised a bank on developing a strategy to enhance recovery on a 'distressed' development where the original developer and the main contractor had become insolvent, but where the asset retained some underlying value.

This included establishing direct payment arrangements from the lenders to key subcontractors to ensure that none of them exercised a right of suspension or termination of the project and providing continuity of work.

On another recent scheme, we sought to overreach the historic problems on a development and third parties' interests by exercising the bank's powers under its charge to sell the asset ‘clean’ to a new bank owned SPV.

The SPV structure also needed to mirror the original structure to enable recovery under the original bond, while allowing for variations to enhance value. To achieve this and maximise returns to the bank, a development management approach was adopted. We therefore advised on the new structure, recovery under existing security, new improved security and step-in arrangements, the best form of development management and building contracts to utilise and on how best to realise value from the scheme, while also ensuring bank management time was kept to a minimum.

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