Interest Rate Management contracts (commonly referred to as ‘swaps’) continue to feature in discussions between commercial borrowers and their bankers. There are benefits to both parties if the product match is right and there is a full understanding/commitment on the part of the borrower. These contracts can however be complex and the negotiations can sometimes be a bit one-sided, with the bank manager supported by treasury function experts and the borrower under pressure to understand the detail, often with the loan affordability depending upon it – and hence some pressure to ‘sign up’.
The inevitable outcome is that further into the contract, issues can arise – such as break costs that the borrower didn’t recall being included or they feel were not properly explained. This can result in a few ‘I beg to differ’s’ or real conflict – potentially leading to a break-down in relationships and often heavy costs.
I have been able to help clients with the task of understanding these contracts, making an appraisal of how suitable they are and negotiating with the bank. I have also been able to support clients (particularly those with property portfolio loans) where difficulties have arisen during the contract.
Today I met with an exceptionally capable lawyer with real expertise in this area – combined with a practical and effective approach to negotiating with banks where a client may feel that they want to ‘take the bank to court’. Being very comfortable with his approach I can see us working well together where cases require more in-depth knowledge of the ‘legals’ in a complex situation – combined with the basic support on understanding the practicalities, what the banks is looking to achieve and how best to approach negotiations (without resorting to expensive ‘firepower’).
Another example of how ‘Cornmill Associates’ has ‘associations’ that can really be harnessed to help a client.