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Print articleThe Limited Duty of Facility Agents
November, 2013 - Paul Hally, Gillian Carty
A recent decision by the English High Court emphasises the limited scope of the duties on facility agents arising from standard facility terms. The role of facility agents in these circumstances has been found to be “solely mechanical and administrative” in nature.
A link to the full text of the decision can be accessed here.
The decision confirms the effectiveness of market standard clauses aimed at restricting the duties, and therefore the potential liability, of agents to the other members of the lending group.
However, if a facility agent knew and knowingly withheld material information or deliberately concealed the state of the borrower’s financial position from the other lenders, then they may incur liability to the other lenders despite their “solely mechanical and administrative” role.
It remains to be seen whether lenders entering into new transactions with a facility agent in place will look to impose more onerous duties upon the facility agent. This would have the effect of providing the lenders with recourse should similar circumstances arise in the future.
Torre Asset Funding Ltd & another v The Royal Bank of Scotland plc [2013] EWHC 2670 (Ch)
A link to the full text of the decision can be accessed here.
The decision confirms the effectiveness of market standard clauses aimed at restricting the duties, and therefore the potential liability, of agents to the other members of the lending group.
However, if a facility agent knew and knowingly withheld material information or deliberately concealed the state of the borrower’s financial position from the other lenders, then they may incur liability to the other lenders despite their “solely mechanical and administrative” role.
It remains to be seen whether lenders entering into new transactions with a facility agent in place will look to impose more onerous duties upon the facility agent. This would have the effect of providing the lenders with recourse should similar circumstances arise in the future.
Torre Asset Funding Ltd & another v The Royal Bank of Scotland plc [2013] EWHC 2670 (Ch)
