Eurozone Crisis: Managing Business Risk
A Member State withdrawal from the eurozone would create many uncertainties. By understanding and preparing now for the complex business and legal questions the eurozone debt crisis could raise, businesses can minimise their exposure to risk and identify any potential opportunities. The kind of questions that should be considered, include:
• Would existing rights or obligations still be receivable or payable in euros?
• Could existing contracts be terminable?
• What provisions should be included in new contracts or legal documentation?
• What steps can be taken to minimise eurozone risks and exposure in the context of M&A transactions?
• What impediments might arise to raising credit or debt?
• Could capital controls be imposed and, if so, what effect might they have?
• Would there be an increased risk, or exposure to, litigation?
Our eurozone taskforce has developed two 'checklists' to help businesses manage their risk:
1. A finance documentation checklist outlining a broad range of issues for loan agreements, bond documentation and derivative transactions relating to the risks of one or more Member States withdrawing from the single currency or even from the EU itself.
2. A briefing note for corporates explaining what action they should be taking now - from how to mitigate redenomination risk and put in place crisis management systems to key considerations around M&A transactions and joint ventures.
We hope you find these briefing notes useful. If you wish to discuss any of the points in further detail please get in touch with one of the lawyers in our Hogan Lovells eurozone taskforce.