Banking On Innovation

Challenge

Because German law does not allow for a universal security interest to be created across the entirety of a company’s assets, a typical security package under German law may well include dozens of documents, posing various risks and potential for inconsistencies, as well as additional time – all of which can run up costs for clients.

Approach

Lawyers in Goodwin’s Frankfurt office saw an opportunity to create a new product that German banks can use to simplify the process of securing syndicated loans. Stephan Kock, Goodwin’s Frankfurt office chair, and Thomas Gerrit Rose, Frankfurt’s Senior Attorney for Knowledge Management & Engineering, collaborated on the development and launch of the En Bloc Security Agreement, an innovation that simplifies and condenses a typical package of security documents into one streamlined model tailored to German law. Another distinguishing feature of the En Bloc Security Agreement is the En Bloc Security Interests Matrix, which provides a table of the loan security set-up visualized on one sheet, making all of the information needed for any secured lending scenario easily accessible to all parties involved.

Outcome

The En Bloc Security Agreement is currently used by five Goodwin clients, banks and debt funds alike. Together with Dr. Anke Johann, Senior Legal Counsel at Deutsche Pfandbrief Bank AG, Stephan Kock recently presented on the new product at the Loan Market Association’s German Real Estate Finance Conference, where more than 100 representatives from banks, non-traditional lenders, loan service providers, and law firms learned about this innovation.

“We saw a need for our clients and in true Goodwin fashion, we developed a comprehensive solution,” said Stephan Kock. “The product is designed to increase efficiency and, thereby, recovery under capped-fee arrangements, while at the same time assuring highest quality and limiting liability risks. We look forward to introducing this product more broadly to the German banking sector.”