Guarantor Or Security Provider Consent To Changes, Consents Or Waivers

With the market volatility across Europe following the Brexit vote and recent drops in share prices triggering margin call events in margin facilities, we consider it timely to consider whether guarantors and/or third party security providers under a margin facility should be asked to consent to any concessions, waivers or other indulgences granted to borrowers.

Background

As a general rule, it is clear under English law that where the liabilities of a borrower are varied without the consent of the guarantor, the guarantor is no longer liable under the guarantee unless the variation is "beneficial" to the guarantor or "unsubstantial"¹. The same rule generally applies to third party security providers.