If you were mis-sold an Interest Rate Hedging Product (IRHP) such as a Swap, Collar or Cap then you may have a claim for indirect or “consequential losses” as a result of the IRHP the bank sold to you. SBC are the UK’s leading advisors in relation to consequential loss claims and are ready to advise you today in relation to these complex claims.
Businesses that have been mis-sold IRHPs often find that the knock-on effects of the payments made under the IRHPs have led directly to further often significant losses, known as consequential losses. Typically businesses that have been mis-sold IRHPs find thereafter that they begin to suffer cashflow restrictions from the increased interest payments, which negatively impact available working capital to increase sales or to expand the business. Development opportunities are lost, basic business costs are difficult to meet, and redundancies are common.
The restrictions in available cash and a weakened balance sheet may have impacted the ability of businesses to then improve their cash positions by obtaining additional funding, especially where breaches or pressures on banking covenants have occurred.
In many circumstances businesses are moved into Barclay’s Business Solutions or Royal Bank of Scotland’s Global Restructuring Group, which can result in significantly increased charges, professional fees and Property Participation Agreements (PPAs) with Royal Bank of Scotland’s West Register, where disproportionate equity stakes are taken by the bank in assets of the business. In some instances the consequence of the mis-sold IRHP has led to the failure and loss of the business itself.
Typical consequential losses include:
- Any additional Bank fees if facilities were ever in default (all associated fees from reviewers, accountants, surveyors, equity stakes, monitoring costs, etc.)
- Administration costs (professional fees, damaged supply relationships, loss of assets, costs of making redundancies, etc.)
- Opportunity Costs (limits on expansion or value of deals or contracts that could not go forward, missed opportunities, inability to pay staff or reward staff, loss of staff, knock-on effects from not pursuing an opportunity or investment, etc.)
- Reputational risks/loss of goodwill – e.g. the downfall in trading from news becoming public about the business’s financial situation as a direct result of the IRHP
- Loss of Profit
- Loss on sale of shares
- Any cancellation of an invoice discounting line
- Any payments from a personal guarantee as a result of a breach because of the IRHP payments
- Net tax costs (i.e. tax implications arising from receipt of any redress that is determined to be due)
You may be entitled to claim for these types of Consequential losses, and SBC can help build and manage your claim.
A business will need to show that it is more likely than not that the particular loss claimed was materially caused by the mis-sale of the IRHP and was a kind of loss that a reasonable person standing in the shoes of the bank at the time the IRHP was sold to you should have foreseen. With consequential loss claims it is important that you have a professional who is not only familiar with the legal requirements for proving consequential losses but also one that has the essential financial expertise to be able to identify not only where a businesses may have incurred additional losses but also those losses that can be linked to the IRHP payments versus losses caused by external factors.
SBC currently represents over 350 SMEs in claims for mis-sold interest rate hedging products and as the market leader in these claims with legal and financial expertise we are uniquely placed to be able to offer a robust and highly specialised solution to those businesses faced with additional indirect losses from an interest rate hedging product.
Even if you have received a redress offer from a bank, SBC goes two steps further. We can determine whether there is scope to challenge the initial offer from the bank by running it through our unique pricing model and recover additional indirect losses from the bank caused by a weakened cashflow, such as loss of profit, loss of opportunity to invest and grow the business and increases in banking costs.
Drawing on our expertise from the legal, banking, investment and forensic sectors we are able to provide a holistic and tailored service to our clients.
Contact us today to start discussing your case via telephone or alternatively you can complete a contact form.