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Asset Based Lending

As traditional bank debt becomes increasingly tricky to source – whether as a consequence of credit appetite or regulatory constraint, asset based lending is growing in its importance as a mainstream corporate financing tool.

Its popularity is down to a combination of factors: the focus the product places on asset quality rather than underlying profitability makes it a worthwhile alternative in turnaround situations, and it’s a valuable driver of growth in the mainstream market as well.

Despite the recent changes in the status of tax creditors in the insolvency payment waterfall, which have impacted significantly on the security available to lenders from corporate inventories, the recent economic shift away from just in time processes makes asset based lending especially appropriate for funding the stretched working capital requirement that supply chain issues are presently giving rise to in the manufacturing sector.  The key here, is a deep understanding from both an operational and a legal point of view of the various competing interests that will arise should the borrower suffer a formal insolvency event and how they will be dealt with in that process.

We’ve been active in the asset based lending market since the 1980s and our ABL finance practice handles all types of asset based funding transactions, whether for the borrower or funder, from straight forward invoice financings to more complex whole balance sheet structures. We also have an impressive track record of involvement in many of the more significant financings taking place in the North of England that have taken an asset based finance approach.

Because our lawyers have experience in the business restructuring environment, they also have a deep understanding of its potential pitfalls. We have the commercial flair to structure transactions in a way that will minimise risks without interfering with the underlying commercial realities of the deal. This underpins everything we do, and enables us to help our clients differentiate between theoretical problems and real issues – then help them move forward.