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Mills Selig


Material Adverse Change - Coronavirus Impact

Material adverse change (MAC) is a drafting term covering unpredictable and unforeseen events or circumstances. MAC clauses are a common feature of facility letters and typically focus on issues that will impact borrower’s ability to perform obligations under a facility letter and associated finance documents.  The impact of COVID-19 is likely to be a factor in the review of MAC clauses in existing and proposed lending transactions.

Lenders and borrowers focus more on the impact of MAC clauses at times when there is a downturn in the economy or when disruptive events or circumstances occur. In response to the uncertainty around COVID-19, lenders may want to restrict lending commitments, call in loans and are likely to become more cautious in their approach to new lending.

Lenders and borrowers will be considering the impact on funding arrangements and concerns around COVID-19 will be relevant especially where borrowers operate in an industry immediately and obviously affected by COVID-19.

Whether COVID-19 could trigger a MAC clause will depend on the drafting of the clause, the specific circumstances and the impact that COVID-19 has on the specific borrower.

Key issues to consider will include:

  • Is the impact from COVID-19 to the business permanent or likely to be temporary only?
  • Do the circumstances affect businesses across the sector or are there additional factors that are specific to the borrower in question?


Having the right legal advice at the right time is crucial. Our expert team offers clear, concise and problem-solving legal advice aimed at accessing finance quickly and effectively.

Please do not hesitate to get in touch with Naomi Gaston in our banking team (details below) or your normal Mills Selig contact to discuss.

Naomi Gaston
Senior Associate

Mills Selig
21 Arthur Street
Belfast, BT1 4GA
Northern Ireland

T: +44 (0) 28 9024 3878

Speak to us on +44 (0)28 9024 3878