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English High Court Interprets Meaning of Material Adverse Change
4 June 2013
The English High Court has considered the interpretation of a material adverse change (“MAC”) clause which is a provision that routinely appears in loan agreements but on which there is limited case law.
Whilst the clause was interpreted against the factual matrix, the decision provides useful guidance on how a MAC clause may be interpreted by the English courts.
The case narrows the ability of a lender to demonstrate a MAC in the financial condition of a borrower and may thus be of some comfort to borrowers in the current economic climate.
Alan J. Davies
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