Financial Law Issues for Lawyers in Transition Economies
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Financial Law Issues for Lawyers in Transition Economies Department of Law The London School of Economics A three day series of seminars in London jointly hosted by The London and Political Science School of Economics and Political Science and the European Bank for Houghton Street London WC2A 2AE Reconstruction and Development. Tel: +44 (0)20 7955 7684 23-25 June 2010 Email: [email protected] www.lse.ac.uk/collections/law/projects/lfm.htm Legal Transition Programme European Bank for Reconstruction and Development One Exchange Square London EC2A 2JN Tel: +44 (0)20 7338 7631 Fax: +44 (0)20 7338 6150 Email: [email protected] www.ebrd.com/law This publication is printed on recycled stock Financial Law Issues for The seminars will explore these topics. The Outline of programme Lawyers in Transition speakers will propose a global approach, taking into account both the common Please note that the details below are subject to change. Details of venues (conference rooms etc) will be made available following registration. Economies law regimes that often apply to multi- jurisdiction financing documents and the This series of seminars is held over a civil law tradition of transition countries. three day period at the London School of Economics and Political Science (LSE) and Delegates will be presented with a Day 1: Project Finance, Public Private Partnerships and Concession Based Financing the European Bank for Reconstruction Certificate of Attendance at the conclusion (23 June 2010, at the London School of Economics and Political Science) and Development. It follows the highly of the seminars. successful series held in 2008 and 2009 and offers the opportunity to examine in depth, LSE’s Law and Financial Co-Chairs for the day: with leading academics and experienced Roger McCormick and practitioners, the key issues of particular Markets Project Christoph Sicking sensitivity for transition economies in areas These seminars are being arranged as 8.45 Coffee such as concession-based project finance part of the ongoing programme of and public private partnerships, secured 9.15-9.30 Welcome and general introduction Roger McCormick LSE’s Law and Financial Markets Project. lending and environment law. The seminars, Christoph Sicking Any profits from these seminars will be which will be designed to stimulate open 9.30-10.15 Session 1 – Introduction to project finance, public private partnerships Roger McCormick used to fund the Project’s activities and discussion (with delegate numbers being and concession based financing other Law Department activities at LSE. limited to approximately 35) will be of More information about the project • The classic ‘star’ structure of limited recourse financing interest to all lawyers based, or practising in, and opportunities to participate in its • Role of special purpose vehicle; single point of responsibility; how limited transition economies. activities can be found at its website recourse is achieved www.lse.ac.uk/collections/law/ • Key risks, risk transfer and allocation projects/lfm.htm or by contacting the Background • Key players and their relationships: host government, sponsors, lenders and director of the project, Roger McCormick, Law is a fundamental part of the toolkit for project company at roger.mccormick@ukonline. economic and political change. Countries • Contractual structure: project structure, finance structure and co.uk or on +44 (0) 7802 604 316. that wish to make the transition from security structure ‘command’ economies to something akin 10.30-11.15 Session 2 – Sources of limited recourse financing, bankability Harry Boyd-Carpenter to a market economy need to implement The EBRD Legal Transition and risks and risk perceptions legal changes in order to facilitate the Programme • Why use limited recourse financing – the worst option, apart from all the rest… necessary economic and political changes. This is not an easy or straightforward The EBRD is associated with these • Strengths and weaknesses of the financing model seminars as part of its Legal Transition process and it takes time. Time is itself a • Sponsor interests and dynamics precious commodity in countries that wish Programme, an initiative to contribute to improve their physical infrastructure to the improvement of the investment • Funding sources – equity and quasi-equity to offer better access to, say, clean water climate in transition countries. Programme • Funding sources – IFIs, ECAs and commercial banks and electricity to their citizens to improve activities focus on the development of • Consequences of this funding choice – the focus on risk transport links within and across their legal rules and establishment of the legal borders. They will need to encourage institutions and culture on which a vibrant • Risk – identification, perception and allocation market-orientated economy depends. foreign investment – and potential investors 11.15-11.45 Tea and Coffee will look to the laws of the investee More information about the programme 11.45-12.30 Session 3 – Key aspects of term sheet and project finance loan agreement Christoph Sicking country to safeguard their investment. can be found at www.ebrd.com/law or by contacting Michel Nussbaumer, Chief • Significance of term sheet The situation is made more complex by the Counsel, EBRD at [email protected] advent of global markets across the entire • Representations and warranties world – especially in banking and finance – • Conditions precedent and the accompanying demands for more • Affirmative & negative covenants globally consistent laws and regulation to serve and regulate those markets. • Financial covenants • Events of default • Dispute resolution • Boilerplate provisions Continued ... 12.30-13.45 Lunch Day 2: An Introduction to Concepts of Insolvency and Security 13.45-14.45 Session 4 – Commentary on contents of term sheet and loan agreement Roger McCormick (24 June 2010, at the London School of Economics and Political Science) • Key issues in negotiations • The planning and structuring of negotiations Co-Chairs for the day: • The realities of risk allocation Michael Bridge and • How documents interlock Frederique Dahan 14.45-15.30 Session 5 – Typical provisions in concession agreements and comparable Roger McCormick 9.30-10.30 Session 1 – Practice and principles Andrew McKnight documents relating to infrastructure and energy projects • Corporate and individual debtors • The parties; duality of roles and conflicts of interest; host government as concession grantor and/or as “customer” – Creditors and others who have dealings with a debtor • The justification for “guarantees” – What happens when things go wrong • How to assess the documents from a lender’s point of view – The general concept of equal misery amongst unsecured creditors – Creditors who receive preferential treatment • Provisions regarding environmental impact, local communities and comparable issues; – Security as a method of protection in an insolvency • The position, and influence, of ‘stakeholders’ – Other reasons for taking security • The specifications • Assets in the context of security – The types of assets that may be available • Price mechanisms and deadlines/milestones – Matching types of security to assets • Benchmarking • Cover by third parties • Force majeure and undue hardship • Liquidated damages and other remedies for non-performance – Guarantees from associated entities • Termination rights and financial consequences of termination – Cover from independent entities • Assignability and step-in rights • Concepts of set-off and netting 15.30-16.00 Tea and Coffee • Cross-border issues and an introduction to conflict of laws 16.00-17.00 Session 6 – Legal opinions and the role of transaction and local lawyers Andrew McKnight 10.30-11.30 Session 2 – Secured finance: the English model Michael Bridge • The purposes of legal opinions • English concepts of security – To cover legal issues, not commercial or financial issues – The English concepts of security, the scope and coverage of security – To cover the conflict of laws issues that arise in the transaction – The types of asset that are available as security – An opinion, not a cast iron assurance – Present v. future assets • The limits on giving opinions • Possessory v. non-possessory security – Speaks as of a certain date – Fixed security – Speaks of identified documentation, not other matters – The concept of the floating charge – Subject to assumptions as to matters of fact and laws of other jurisdictions – Priority issues as between competing claimants – Legal qualifications • Alternatives to security – In some jurisdictions, may not cover unknown statutes – The concept of quasi-security • The beneficiaries of legal opinions (eg, immediate parties, parties with – Equipment finance techniques a derivative interest, regulators, credit rating agencies, security trustees) – Retention of title in favour of suppliers • Who should give them (eg, lawyers qualified in the relevant jurisdictions, independent lawyers, the banks’ lawyers, the borrower’s lawyers, in-house lawyers) – Receivables financing • The matters that should be covered – Title transfer transactions (particularly for securities) – Local law opinions (eg, in the jurisdiction of incorporation/establishment • Cross-border issues in secured/proprietary transactions and in the jurisdiction where relevant assets are located) – Characterising the issues involved in a transaction – The transactional opinion (eg, as to the governing law of the facility agreement) – The issues that