English High Court Interprets Meaning of Material Adverse Change

4 June 2013
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  • 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.