Commercial Law and Practice WS12 D1

LEGAL PRACTICE COURSE

Commercial Law and Practice
Workshop 12


Topic(s):
 Facility Agreements:
o Representations
o Undertakings
o Events of Default


Learning Outcomes:
By the end of this session you will be able to:
 Amend the drafting of representations and undertakings in a facilities agreement to
protect your borrower client
 Analyse whether an event of default has occurred pursuant to a facilities agreement
 Explain the consequences of an event of default


Session Activities:
 Review the Pre-session Task, in which you are asked to amend the drafting of
representations and events of default in a facilities agreement
 Carry out the In-Session Task, in which you are asked to consider whether an event of
default has occurred


Materials Attached:
 Pre-session Task
 In-session Task


Preparation for Session:
 Read Chapter 5, Chapter 7 (excluding Paragraphs 7.3 to 7.3.4.4), Chapter 8 and Chapter
11 of the Banking and Capital Markets manual
 Read the attached Pre-session Task carefully and prepare a written response. Bring
your written response to the session.
 Bring the draft Facilities Agreement from Workshop 10 to the Session.


Post-Session:
 Review your notes of the session




docs_239960386.docx 1/10 © City, University of London 2020

, LEGAL PRACTICE COURSE


Commercial Law and Practice
Workshop 12: Pre-session Task


For the purposes of this Task, you act for Pegasus Dreams plc. To complete this task,
you will need to analyse the draft Facilities Agreement provided in Workshop 10 (d1).

To: Trainee
From: Supervisor
Date: [Date of Workshop]
Subject: Representations and Undertakings

Our client, Pegasus Dreams plc (“Dreams”), has asked us to review the representations and
undertakings in Clauses 12 and 13 of the draft Facilities Agreement. You will remember that
Dreams has two subsidiaries, Pegasus Services Limited (“Services”) and Pegasus
Promotions Limited (“Promotions”).

We will need to consider the following background facts:

1. Emily Poplin, a young girl who suffered injuries on a theme park ride operated by
Services, commenced proceedings against Services three days ago. The case is
receiving significant media attention.

2. Promotions is in breach of an advertising services agreement with Williams
Management Limited (“Williams”). Promotions is currently negotiating with Williams
and expects to be able to settle the dispute within the next two months by paying a
cash sum to Williams.

3. Dreams, Services and Promotions entered into a Facility Agreement with Miluna
Bank plc (“Miluna”) two years ago. The Miluna Facility Agreement was guaranteed
by Dreams and Miluna took security over all freehold properties then owned by
Dreams.

Please read Clauses 12, 13 and 14 of the draft Facilities Agreement with Borli Bank plc
in their entirety. I’d like you to suggest appropriate amendments to Clauses 12.6(b),
12.9 and 13.3 to protect our client, Dreams.

Kind regards

Supervisor

■ Who are you acting for?
■ What is their role in the transaction?
■ Stage in the transaction / date ?

We are advising Pegasus Dreams and that’s the holding company. We are advising the
group as a whole ie the holding company and its subsidiary.

What’s our clients role in the transaction? In the facility agreement where the parties are
set out, Pegasus dreams is defined as the company. When we consider clause dealing with
2.1a (facilities) – ‘’the lender makes available to the company Pegasus Dreams plc the term
loan’’ ie the facility A commitment.

Stage in the transaction / date ?
We are not told to assume it’s any date other than ws date. it’s a draft facility agreement so it
hasn’t yet been entered into its subject to negotiation + amendments to various provisions.


docs_239960386.docx 2/10 © City, University of London 2020