TRW & Co · Banking, Finance & Restructuring
Leveraged and Acquisition Finance Lawyers in London
Leveraged finance lawyers London sponsors, borrowers and lenders instruct structure and negotiate the debt behind buyouts, take-privates and recapitalisations. With private credit competing hard with banks, liability management under scrutiny and Part 26A cram down reshaping restructurings, the terms agreed at signing decide flexibility, cost and control.
Key pointAgree security principles, guarantor coverage and certain funds terms at term sheet stage: they decide which group companies support the debt, when, and whether funding is truly certain if regulatory clearances take longer than planned.
At a glance
Charges: 21-day deadline
Under section 859A of the Companies Act 2006, a charge must reach Companies House within 21 days beginning with the day after creation or it is void against an insolvency officeholder.
Cash confirmation in bids
Rule 24.8 of the Takeover Code requires a third-party confirmation that cash is available for full acceptance, so bid debt must be on a certain funds basis.
Financial assistance still bites
Section 678 of the Companies Act 2006 still bars public companies and their subsidiaries from assisting the acquisition of the public company's shares.
Interest restriction threshold
The corporate interest restriction does not restrict groups with less than £2 million of net interest expense a year; above that, deductions may be capped.
Cram down case law
Court of Appeal decisions in Adler (2024) and Thames Water (2025) shape how Part 26A plans can bind dissenting creditors in leveraged restructurings.
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What leveraged finance lawyers London clients need: the scope of leveraged and acquisition finance
Leveraged finance lawyers London sponsors, borrowers, banks and private credit funds instruct work on debt used to buy companies or to support businesses carrying high levels of borrowing relative to earnings. The classic case is a private equity buyout, where a new holding company borrows to fund much of the purchase price and the target group later guarantees and secures that debt.
The same toolkit applies to take-private bids for listed companies, refinancings and recapitalisations, dividend recaps, add-on acquisitions and amendments when a borrower needs covenant headroom. The legal work combines contract negotiation, company law, insolvency law, tax and, for public deals, the Takeover Code.
TRW & Co acts for sponsors and management teams, corporate borrowers, banks, private credit and direct lending funds, and family offices and international investors, including from Bangladesh, the Gulf and Asia, acquiring UK businesses. We work closely with our private equity and banking and finance teams.
Debt structures: banks, private credit and bonds
The market has two main sources of leveraged debt: syndicated bank loans arranged by banks and sold to institutional investors, and direct lending by private credit funds. High yield bonds, often governed by New York law, sit alongside them for larger deals. Leveraged finance lawyers London sponsors use should compare the options on cost, certainty, flexibility and the ease of later amendment.
| Structure | Typical lenders | Key features | Trade-offs |
|---|---|---|---|
| Senior term loan B with revolving facility | Arranging banks; institutional investors in the syndicate | Bullet repayment, often covenant-lite term debt, springing financial covenant on the revolver | Market flex risk at syndication; many lenders to deal with on amendments |
| Unitranche | One or a small club of private credit funds | Single tranche of senior debt, often with a super senior revolver from a bank | Higher margin; faster execution and easier amendments |
| Senior and second lien or mezzanine | Banks plus specialist junior lenders | Layered debt with an intercreditor agreement setting payment and enforcement priority | More complex intercreditor terms; higher blended cost |
| High yield bonds | Capital markets investors | Incurrence covenants only, long tenor, fixed rate | Disclosure and listing work; less flexible to amend; bridge facility needed for certainty |
| Holdco PIK or preferred equity | Specialist funds | Interest rolled up, structurally subordinated to opco debt | Expensive; restrictions in senior documents |
Most European leveraged loans are documented on templates developed by the Loan Market Association and then heavily negotiated. Sterling loans usually reference compounded SONIA, and euro loans EURIBOR. Our guide to LMA facility agreements explains the key clauses.
The legal and regulatory framework
Leveraged lending to companies is largely a matter of contract, but statute shapes how security is taken, what the target group can do to support the debt and what happens if the group fails.
Company law
- Financial assistance. Under section 678 of the Companies Act 2006, a public company, or a subsidiary of a public company, cannot give financial assistance for the acquisition of the public company's shares, subject to exceptions. The prohibition no longer applies to private companies, so in a take-private the target is often re-registered as a private company before it gives guarantees and security.
- Directors' duties and corporate benefit. Directors of each guarantor must consider whether giving a guarantee promotes the success of the company. Board minutes should record that consideration, particularly for upstream and cross-stream guarantees.
- Registration of charges. Under section 859A of the Companies Act 2006, a charge must be delivered to Companies House within 21 days beginning with the day after its creation, or it is void against a liquidator, administrator and creditors.
Insolvency law
The Insolvency Act 1986 allows transactions at an undervalue and preferences to be challenged if the company enters insolvent liquidation or administration within set periods, and can invalidate floating charges granted for past value. Section 233B restricts suppliers from terminating supply contracts because of insolvency. Restructuring plans under Part 26A of the Companies Act 2006 allow cross-class cram down of dissenting creditors, which shapes negotiating leverage in any leveraged restructuring.
The Court of Appeal has refined how cram down works. In Strategic Value Capital Solutions Master Fund LP v AGPS BondCo plc [2024] EWCA Civ 24 (Adler), it emphasised that departing from the ranking creditors would have in the relevant alternative needs proper justification. In Kington S.à r.l. v Thames Water Utilities Holdings Ltd [2025] EWCA Civ 475, it held that the no-worse-off test is necessary but not sufficient. Our guide to Part 26A restructuring plans covers these cases.
Tax
The corporate interest restriction can limit deductions for net interest expense, but groups with less than £2 million of net interest expense a year are not restricted. UK withholding tax can apply to yearly interest paid to non-UK lenders unless an exemption, treaty relief or the treaty passport scheme applies, and listed debt can rely on the quoted Eurobond exemption. Facility agreements allocate this risk through gross-up and qualifying lender clauses. Our transactional tax team models these points.
Public-to-private deals and the Takeover Code
Where a bid for a UK listed company includes cash, Rule 24.8 of the Takeover Code requires the offer document to include confirmation by an appropriate third party, usually the bidder's financial adviser, that resources are available to satisfy full acceptance. That adviser will only confirm if the debt is available on a certain funds basis, with very limited conditions and events of default during the offer period.
In a leveraged deal, the debt terms agreed in the first week often decide who controls the business if trading goes wrong three years later.
Key terms sponsors and lenders negotiate
Certain funds
Sellers in competitive UK auctions expect certain funds similar to public bids. Lenders can refuse to fund only for a short list of major defaults and conditions within the bidder's control. Leveraged finance lawyers London sponsors appoint should align the certain funds period with the sale agreement long-stop date and regulatory timetable, including any NSIA or merger control clearance.
Financial covenants and EBITDA
Covenant-lite term loans have no maintenance covenant, but revolvers and unitranche loans often have a leverage test. The definition of EBITDA, including add-backs for synergies and cost savings, and equity cure rights, can matter more than the headline ratio.
Debt capacity and payments
Baskets for incremental debt, permitted acquisitions, investments and distributions determine how much the sponsor can do without lender consent. Lenders increasingly focus on provisions that would let value move outside the lenders' security net, an issue sometimes called liability management, and negotiate blockers.
Transfers and voting
Sponsors want control over who holds their debt through whitelists and blacklists, and protections against lenders that refuse amendments, such as yank-the-bank and snooze-you-lose clauses. Lenders want liquidity and fair voting thresholds for key decisions.
Intercreditor terms
Where there is a super senior revolver, second lien or hedging, the intercreditor agreement sets payment waterfalls, enforcement standstill periods, release mechanics on a distressed sale and the treatment of hedge counterparties.
Hedging, pricing and sustainability-linked terms
Floating-rate leveraged loans usually require the borrower to hedge part of its interest rate exposure. Hedge counterparties typically share in the security and rank alongside senior lenders, so their voting rights and close-out entitlements must be dealt with in the intercreditor agreement. Margin ratchets that reduce pricing as leverage falls are common, and some deals add sustainability-linked margin adjustments tied to agreed performance indicators. Lenders and sponsors should make sure those indicators are measurable and verifiable, to avoid disputes and greenwashing risk.
Market and regulatory scrutiny
Lending to companies is generally outside the regulated activities that require authorisation under the Financial Services and Markets Act 2000, but the market is not unregulated. Banks that arrange and hold leveraged loans are supervised by the Prudential Regulation Authority, which has long focused on risk management in leveraged lending. The Bank of England's financial stability work has also looked at the growth of private credit and private markets and the links between funds, banks and borrowers.
For borrowers and sponsors, this scrutiny shows up in practice through tighter credit approval, more demanding information requirements and closer attention to valuation and leverage. For private credit funds, it raises questions about valuation policies, conflicts between funds holding different parts of a capital structure, and investor reporting.
Leveraged finance lawyers London funds and banks instruct should also watch conduct issues. Lenders that receive inside information on listed borrowers, or trade debt while holding confidential information, must manage market abuse risk. Information barriers and public-side and private-side arrangements are a standard part of syndicated deals.
Finally, the drafting itself is under scrutiny. Disputes over how documents permit transfers of assets, priming debt or non-pro rata transactions have made lenders more careful. Leveraged finance lawyers London lenders trust now review liability management protections as a core credit issue, not boilerplate.
The leveraged finance process step by step
- Financing strategy. The sponsor chooses between bank, private credit and bond routes, and invites lenders to bid on terms against the acquisition timetable.
- Commitment papers. Negotiate the commitment letter, term sheet, fee letter and, where relevant, interim facilities agreement giving certain funds at signing.
- Diligence and structure. Lenders review the target's legal, financial and tax diligence; the parties agree the holding structure, guarantor coverage test and security principles.
- Long-form documents. Negotiate the senior facilities agreement, intercreditor agreement, security documents and hedging documents.
- Conditions precedent. Deliver corporate authorisations, legal opinions, KYC, the funds flow and evidence of equity contribution.
- Funding and completion. The facilities are drawn and the acquisition completes, with the target refinancing its existing debt.
- Post-closing. Target companies accede as guarantors and grant security, charges are registered at Companies House within 21 days, and any public target is re-registered as private.
- Life of the loan. Manage reporting, compliance certificates, add-on acquisitions, amendments, repricings and refinancings.
Documents and evidence to assemble
- Commitment letter, term sheet, fee letter and any interim facilities agreement.
- Senior facilities agreement, intercreditor agreement and hedging documents.
- Debentures, share charges and local law security for overseas group companies.
- Board minutes and shareholder resolutions for each obligor, including corporate benefit analysis.
- Structure chart, funds flow and tax structure paper.
- Legal, financial and tax diligence reports with lender reliance.
- Know your customer documents, sanctions and anti-money laundering checks.
- Evidence of regulatory clearances and other conditions to completion.
For lenders, the legal opinions matter as much as the documents: they confirm capacity, due execution and enforceability for each obligor, and their assumptions and qualifications should be read rather than filed. For borrowers, a clear conditions precedent checklist agreed early is the best protection against a last-minute delay on the funding date.
Agree the security principles and the guarantor coverage test at term sheet stage. They define which companies give guarantees and security, and what local law costs and limitations apply. Leaving them to the long-form stage can delay funding and increase cost across several jurisdictions.
Risks and common mistakes
Missing the 21-day charge registration window
A charge not delivered to Companies House within 21 days beginning with the day after creation is void against a liquidator, administrator and creditors, and the secured debt becomes immediately payable. Late registration needs a court order. Post-closing accessions are where deadlines slip, because charges are signed by many group companies after completion. Use a closing tracker that diarises every charge, and check the particulars filed against the document. Our guide to taking security explains the steps.
Unlawful financial assistance on a take-private
A public company target and its subsidiaries cannot give financial assistance for the acquisition of the target's shares, subject to exceptions. Guarantees and security for acquisition debt given before the target re-registers as private may therefore be unlawful and unenforceable, and the directors may be exposed. Plan the re-registration timetable carefully, and structure the financing so the target group's support follows it.
Mismatched certain funds and regulatory timing
If the debt commitment expires before the acquisition can complete, the bidder may be left without funding while still bound to the seller. NSIA, merger control and sector regulator approvals can take longer than expected. Align the commitment period and ticking fees with a realistic regulatory timetable, and check that the conditions in the finance documents mirror those in the sale agreement.
Loose EBITDA and basket definitions
Generous add-backs and builder baskets can let a borrower incur more debt, pay dividends or move assets out of the security net long before a covenant is tested. For lenders, this erodes recoveries in a downturn. For sponsors, overly tight definitions can force costly amendments. Model the definitions against a downside scenario, and focus negotiation on the terms that move value.
Overlooking NSIA and sanctions on enforcement
Taking security over shares does not usually confer control, but enforcing a share charge can be an acquisition of control in a business within a sensitive NSIA sector, requiring clearance before the lender takes control. Sanctions designations affecting a sponsor, investor or group company can also freeze payments. Build NSIA and sanctions analysis into both the original financing and any enforcement plan.
Cross-border leveraged finance: Bangladesh, the Gulf and Asia
Leveraged deals for UK targets often involve foreign sponsors, overseas group companies and lenders from several jurisdictions. Leveraged finance lawyers London borrowers use should coordinate local law security, tax and regulatory advice early.
- Bangladesh. Bangladeshi groups acquiring UK businesses face foreign exchange controls at home, and outward investment usually needs approval from Bangladesh Bank. That affects how equity is funded and how quickly. TRW & Co's Dhaka office advises on the Bangladeshi side while the London team handles the English-law acquisition finance.
- The Gulf. Sovereign funds and family offices from the Gulf invest as sponsors, co-investors and lenders. Some require Shariah-compliant tranches; see our Islamic finance page.
- Singapore and China. Asian banks and funds lend into European deals; documentation, KYC and sanctions requirements may differ from those of European lenders.
- Overseas guarantors. Guarantees and security from group companies outside England need local law advice on corporate benefit, financial assistance and perfection requirements.
How TRW & Co helps
We act as leveraged finance lawyers London sponsors, borrowers and lenders can rely on throughout the deal and the life of the loan. We give no guarantees of outcome, and where advocacy in the higher courts is required, we instruct specialist counsel.
Acquisition financing
Commitment papers, interim facilities agreements and senior facilities agreements for buyouts and add-on acquisitions, aligned with our M&A team's sale documents.
Public-to-private financing
Certain funds facilities supporting cash confirmation under the Takeover Code, re-registration planning and post-completion security.
Private credit and unitranche
Unitranche and super senior revolver structures, agreements among lenders and fund-level considerations, with our private credit lawyers.
Intercreditor and security
Intercreditor agreements, debentures, share charges and coordination of overseas security packages.
Amendments and refinancings
Covenant resets, amend and extend transactions, repricings, incremental facilities and refinancings.
Stressed situations
Standstills, waivers, enforcement planning and restructuring plans with our restructuring and insolvency team.
To discuss a financing, contact our London office at Holborn Gate, 330 High Holborn, London WC1V 7QH, email info@trw.co, or browse all our practices.
Checklist for decision-makers
- Which route offers the best mix of cost, certainty and flexibility: bank, unitranche or bonds?
- Do the certain funds terms match the acquisition and regulatory timetable?
- Have you agreed security principles and the guarantor coverage test at term sheet stage?
- Is a public target being re-registered before it gives guarantees and security?
- Are EBITDA, add-backs and baskets tested against a downside case?
- Has the after-tax cost of debt been modelled, including the corporate interest restriction and withholding tax?
- Is there a post-closing tracker for 21-day charge registrations?
- Have NSIA, sanctions and foreign exchange approvals been considered for funding and enforcement?
- Have you taken advice from leveraged finance lawyers London lenders recognise on local law security?
Frequently asked questions
01What is the difference between leveraged finance and ordinary corporate lending?
Leveraged finance involves higher debt relative to earnings, usually to fund an acquisition, recapitalisation or dividend. The debt is often borrowed by a new holding company and later guaranteed and secured by the target group. Because recoveries depend on the business's enterprise value, documents focus on structural seniority, intercreditor priority, baskets for further debt and payments, and transfer rights. Ordinary corporate lending to investment-grade borrowers tends to be unsecured and lighter in its covenants.
02What does certain funds mean?
Certain funds means the lenders can only refuse to fund an acquisition in very limited circumstances, typically major defaults and conditions within the bidder's control, during a defined period. It is required on UK public bids because Rule 24.8 of the Takeover Code requires a third-party confirmation that cash resources are available. Sellers in competitive private auctions often expect similar certainty. The certain funds period should match the acquisition long-stop date and regulatory timetable.
03Should we use a bank-led term loan or a unitranche from a private credit fund?
It depends on the deal. Bank-led syndicated loans can offer lower margins for larger deals but carry syndication and market flex risk, and amendments may involve many lenders. Unitranche from one or a few private credit funds usually costs more but offers faster execution, confidentiality and simpler amendments. Mid-market deals often use unitranche with a super senior revolving facility from a bank. Compare the all-in cost, flexibility of baskets and covenants, and the lenders' approach in a downturn.
04Can a target company guarantee the debt used to buy it?
Usually yes for private companies, because the prohibition on financial assistance was abolished for them. Directors must still consider corporate benefit and their duties, and record that in board minutes. For a public company, section 678 of the Companies Act 2006 prohibits the company and its subsidiaries from giving financial assistance for the acquisition of its shares, subject to exceptions. In take-privates, the target is usually re-registered as a private company before guarantees and security are granted.
05What happens if we miss the deadline to register a charge?
A charge not delivered to Companies House within 21 days beginning with the day after its creation is void against a liquidator, administrator and creditors of the company, and the secured money becomes immediately payable. The court can extend the period on specific grounds, such as inadvertence, where it is just and equitable. Lenders therefore insist on careful post-closing processes, especially where many group companies grant security after completion.
06How does a restructuring plan affect leveraged lenders?
A Part 26A restructuring plan can bind dissenting classes of creditors through cross-class cram down if the statutory conditions are met and the court exercises its discretion to sanction it. Court of Appeal decisions in Adler and Thames Water have emphasised fair allocation of the benefits of a restructuring and that the no-worse-off test is necessary but not sufficient. Lenders should consider plan dynamics when negotiating intercreditor terms and voting thresholds.
07Can TRW & Co act on cross-border acquisition financing involving Bangladesh?
Yes. Our London office is authorised and regulated by the Solicitors Regulation Authority and advises on English-law acquisition finance, while our Dhaka office advises on Bangladeshi law, including foreign exchange approvals for outward investment. We also coordinate local counsel in other jurisdictions where group companies give guarantees or security. Where higher court advocacy is needed in England, we instruct specialist counsel.
Sources and official materials
- Companies Act 2006, section 678 — Financial assistance for acquisition of shares in public companies
- Companies Act 2006, section 859A — Registration of charges
- Takeover Code Rule 24.8 — Cash confirmation in offer documents
- Corporate interest restriction overview (CFM95110) — HMRC guidance on interest deductibility
- Companies Act 2006, Part 26A — Restructuring plans and cross-class cram down
- Insolvency Act 1986, section 233B — Restrictions on insolvency termination clauses
- Loan Market Association — Market-standard loan documentation
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.