Is the Borrower unreasonably withholding its consent to transfers?

Borrowers across Europe are increasingly refusing consent to assignments and transfers by Lenders. The reasons cited are various, including that the Borrower is not familiar with the proposed new lender, or for a concern that the new lender is a distressed debt fund and its interests are not compatible with those of the Borrower.

There is currently no English case law which is directly on point regarding the meaning of “reasonableness” in the context of loan transfers, so what constitutes “unreasonably withholding consent” is generally considered in light of landlord and tenant authorities or in other commercial contexts. Ultimately, whether or not a Borrower is being "reasonable" will turn on the facts of each case, including consideration of the nature of the other Lenders within the syndicate and the Borrower's reasons provided for refusal.

Under English law, the burden is on the party seeking consent to prove that the Borrower is being unreasonable where consent is withheld.

Please note, if the Borrower is located outside of the UK, local law may apply to the consent request and the position can differ from jurisdiction to jurisdiction. Click on the following links for key English judgments: Porton Capital Technology Funds and Others v 3M UK Holdings Ltd and another [2011] EWHC 2895 (Comm) (7 November 2011)British Gas Trading Ltd. v Eastern Electricity plc & others [1996] EWCA Civ 1239) and Barclays Bank Plc v Unicredit Bank AG (formerly Bayersche Hypo-und Vereinsbank AG) [2014] EWCA Civ 302.