Loan Agreements & Security Documentation

Loan Agreement Structures & Key Provisions

We draft and negotiate facility agreements across the full spectrum of lending transactions, from straightforward bilateral overdrafts to complex syndicated and multi-tranche financing arrangements. Our approach is to ensure that each loan agreement accurately reflects the commercial understanding between the parties while providing appropriate protections through carefully drafted covenants, events of default, and enforcement provisions. Financial covenants are a critical component of any loan agreement, and we have extensive experience drafting and negotiating covenant packages across a wide range of industries and transaction types. We draft maintenance covenants, incurrence covenants, and reporting covenants tailored to the specific financial profile and risk characteristics of each borrower. Our covenant work covers interest cover ratios, leverage ratios, debt service cover ratios, minimum net worth requirements, and limitations on additional indebtedness, disposals, and dividends. We ensure that definitions of financial terms follow market standard conventions, including those set out in the Australian Alternative Finance Council templates and the Asia Pacific Loan Market Association documentation, while adapting these to the specific requirements of each transaction. Events of default are another critical area where our expertise adds significant value. We draft and negotiate default provisions covering payment defaults, cross-defaults to other financial arrangements, material adverse change clauses, insolvency events, and breaches of representation and warranty. Our team has particular experience in negotiating material adverse change clauses in a manner that provides lenders with appropriate protection while giving borrowers sufficient certainty that the clause will not be invoked inappropriately based on general market conditions. We also draft and advise on enforcement provisions, including acceleration clauses, set-off rights, and the lender's ability to appoint receivers or take possession of secured assets.

Security Documentation & PPSA Compliance

Our security documentation practice encompasses all forms of security recognised under Australian law, with particular focus on the interaction between the Personal Property Securities Act 2009 (Cth) and other registration regimes including the Torrens system for land and the Australian Securities and Investments Commission register for company charges. We prepare fixed and floating charges over all present and after-acquired property of corporate borrowers, ensuring that the charge creates a valid fixed charge over assets including plant and equipment, intellectual property, and financial assets while maintaining a floating charge over circulating assets. Our PPSA practice is comprehensive. We advise clients on the attachment, perfection, and priority of security interests in all classes of collateral including accounts, inventory, plant and equipment, intellectual property, and financial property. We conduct PPSR searches to identify existing registered interests, draft financing statements that accurately describe the collateral, and manage the ongoing maintenance of registrations including amendments and renewals. We also advise on the priority rules under the PPSA, including the rules for purchase money security interests (PMSIs), and the circumstances in which a security interest vests in the grantor upon the grantor's insolvency. For transactions involving Queensland land, we prepare mortgages, caveats, and related documentation that comply with the Land Title Act 1994 and the Property Law Act 1974. We advise on the registration process through Queensland Titles Registry, the priority of registered versus unregistered interests, and the enforcement of mortgages including mortgagee sales and recovery of possession. Our security documentation for transactions involving multiple secured parties includes security trust deeds, intercreditor deeds, and priority agreements. We draft these documents to clearly establish the respective rights and obligations of senior and junior creditors, the application of proceeds, and the voting and decision-making framework for enforcing security and dealing with default.

Guarantees, Indemnities & Enforcement Strategy

We prepare and advise on guarantees and indemnities in all commercial and lending contexts, with a particular focus on ensuring enforceability and understanding the rights and obligations of all parties. Our guarantee documentation covers unlimited and limited guarantees, continuing guarantees, directors' guarantees, parent company guarantees, and bank guarantees and performance bonds. We pay careful attention to the principles governing the enforceability of guarantees, including the requirement for independent legal advice, the circumstances in which a guarantee may be set aside for unconscionable conduct, and the rights of contribution and subrogation following payment under a guarantee. We advise lenders on the steps required to ensure that guarantees are enforceable, including the provision of independent legal advice to guarantors, the disclosure of material information about the borrower's financial position, and the proper execution of guarantee documents. We also advise guarantors on the extent of their liability, the circumstances in which a guarantee may be discharged, and the availability of defences including the Yerkey v Jones principles for guarantees given by volunteers or parties in a special relationship. Our enforcement practice covers all aspects of security enforcement, from pre-enforcement strategy and demand letters through to appointment of receivers, mortgagee sales, and recovery proceedings. We advise lenders on the conduct of enforcement sales, the duty to obtain market value, and the avoidance of claims for equitable mortgage or inadequate sale price. We also advise on the enforcement of personal property securities, including the seizure and disposal of collateral under the PPSA. Our enforcement advice is always practical and commercial, focusing on achieving the best possible recovery outcome while minimising cost, delay, and litigation risk.

SMSF Lending & Specialised Finance Transactions

Australia has a unique and well-developed market for lending to self-managed superannuation funds, and our practice includes substantial experience in documenting and advising on limited recourse borrowing arrangements and related transactions. We act for both lenders and SMSF trustees in documenting LRBAs, ensuring compliance with the Superannuation Industry (Supervision) Act 1993, the Superannuation Industry (Supervision) Regulations, and the Australian Tax Office's regulatory guidance on SMSF lending. Our LRBA documentation includes the loan agreement, the trust deed establishing the holding trust (often referred to as a bare trust or custodian trust), and the security documentation required to protect the lender's position. We ensure that the recourse of the lender is limited to the asset acquired with the borrowed funds, in accordance with section 67A of the SIS Act, and that the structure does not involve any charge over other assets of the SMSF. We prepare bare trust deeds that clearly establish the trustee's obligations, the beneficiary's rights, and the mechanism for transfer of the legal title to the SMSF trustee upon repayment of the loan. Our specialised finance work extends beyond SMSF lending to include margin lending arrangements, securities lending transactions, and other forms of finance involving financial products. We advise lenders and borrowers on the documentation and regulatory requirements for margin lending, including the disclosure obligations under the Corporations Act and the ASIC regulatory guidance on margin lending. Our team also advises on structured finance transactions, warehouse facilities, and other forms of specialised finance.

Loan Agreements & Security Documentation FAQs (Queensland Law)