Titan Europe 2007-1 (NHP) Limited - Irish Stock Exchange

law fixed charges. The security over the Borrower Rent Collection Account held in Jersey are expressed to be
an assignment of the account holder’s title to the account.
With regard to payments of rent which are made into a Rent Account, following the Closing Date, there
may be a risk of the Borrower, in breach of the Libra Whole Loan and any Related Security, charging or
assigning the rents to a third party. Under English law, the right to receive rent payments passes to a mortgagee
(including the Note Trustee) on enforcement of the mortgage without the need for any express assignment, and
therefore the claim of the Security Agent or the Note Trustee under the Security Agreements would, as a matter
of legal priority, defeat any claim by a subsequent chargee or assignee of the rent. There would, however, be no
claim against a Libra Tenant who had previously responded to notice of the wrongful assignment by paying rent
to a third party in ignorance of the Security Agreements. The position under Scots law is broadly analogous (i.e.
the right to receive payment of rent is deemed to be assigned to the heritable creditor under a standard security
upon enforcement).
The purchase of the Libra Loan and of the beneficial interests in the Related Security has been structured in
an attempt to address such risk to the rent payments by ensuring that payments of rent will continue to be made
to a Rent Account.
Special Purpose/Single Purpose Vehicle (“SPV”): SPV covenants are generally designed to limit the
purpose of the borrowing entity to owning the related property, making payments on the related loan and taking
such other actions as may be necessary to carry out the foregoing in order to reduce the risk that circumstances
unrelated to the loan and related property result in a borrower insolvency. SPVs are generally used in
commercial loan transactions to satisfy requirements of institutional lenders and recognised statistical rating
organisations. In order to minimise the possibility that an SPV will be the subject of insolvency proceedings,
provisions are generally contained in the SPV’s organisational documents and/or documentation relating to
mortgage loans that, among other things, limit the indebtedness that can be incurred by such entity and restrict
such entity from conducting business as an operating company (thus limiting exposure to outside creditors).
The Credit Agreement contains provisions that no Obligor may carry on any business other than the
ownership and management of its interests in any Property owned by it, or its interests in any Subsidiary owned
by it. In the case of Guarantor 15 and its subsidiaries (Guarantor 16, Guarantor 17, Guarantor 18 and Guarantor
22), each has undertaken additionally in the Credit Agreement that it has no further liabilities with respect to
their respective care home businesses arising prior to sale of the same in June 2002, that cannot be satisfied out
of the Approved Management Fee. In the case of Propco 10, the company may provide property management
services to the Property Owners; additionally Propco 10 is the only Obligor permitted to have employees, and it
is restricted to no more than six employees at any time. However, there can be no assurance that all or most of
the restrictions customarily imposed on SPVs by institutional lenders and recognised statistical ratings
organisations will be complied with by all the Obligors, and even if all or most of such restrictions have been
complied with by the Obligors, there can be no assurance that such compliance will prevent the Borrower or any
other Obligor from becoming insolvent.
Certain of the Obligors were incorporated or formed for the purposes of acquiring (or refinancing the
acquisition of) and holding the legal and beneficial interests in one or more related properties. The Issuer has
been informed by the Loan Arranger that each of the Borrower and the Obligors (other than Propco 10) has no
material or contingent liabilities (other than such as are fully subordinated pursuant to the Guarantee and
Subordination Deed) except for the related Libra Whole Loan.
As a result of the UK Pensions Act 2004, it is possible that the Obligors might be held statutorily
responsible by the UK Pensions Regulator for a financial support contribution to the UK pension scheme of an
affiliated company within the Borrower Group. The Issuer has been informed that no Obligor, other than
Propco 10, may have any liability with respect to the employees of Propco 10 and their entitlements or benefits.
Further, the Issuer has been informed that the pensions liabilities of Propco 10 are not “Defined Benefit
Schemes” (as that term is used in the Pensions Act 2004), and it is only in connection with such schemes that
such a contribution would usually arise.
As shown in the table below, certain Obligors were formed shortly prior to the origination of the Libra
Whole Loan whereas others were formed significantly prior to that.
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