A lender may be certain, commercially, that a borrower’s circumstances have deteriorated. West One Loan Ltd v Okroyan [2026] EWHC 1428 (Ch) is a reminder that certainty is sometimes not enough.
Where a facility agreement requires the lender to form an opinion before an event of default arises, the lender must prove that opinion was actually formed – at the time, by the right person, on the right basis. Hindsight does not count.
West One v Okroyan: The Facts
West One advanced a £4m bridging loan secured against a residential property. The borrower was later designated under the UK’s Russia sanctions regime. When the loan wasn’t repaid, West One sought possession of the secured property, relying on several alleged events of default under the loan documents.
Why Two Events of Default Failed in West One v Okroyan
The court rejected West One’s reliance on both (i) an illegality event of default and (ii) a material adverse change (MAC) event of default. These are two of the most commonly relied-upon provisions in lending and secured lending enforcement.
On the MAC point, the facility required the lender to form a reasonable opinion that a MAC had occurred. West One argued the borrower’s sanctions designation obviously qualified. The court disagreed with the premise – a conclusion being obvious in hindsight is not evidence that the required opinion was actually formed, by the right decision-maker, at the right time. Without contemporaneous evidence of that decision-making process, the MAC clause couldn’t be relied on.
West One still won possession – but on a different basis: breach of a repeating representation that no MAC had occurred, a distinct contractual mechanism from the MAC event-of-default clause itself. The lender’s enforcement case survived only because a fallback route existed.
Why This Matters For Lenders and Credit Committees
Most finance documents give lenders discretion-based rights: MAC clauses, “reasonably satisfied” tests, illegality triggers, creditworthiness determinations. Lenders often focus on whether the underlying facts support these conclusions. Okroyan shows that’s only half the job; you also need evidence that the decision itself was made, and made properly, if the default clause is ever challenged in loan enforcement or secured lending litigation.
At the point of enforcement, that decision may be years old. Without contemporaneous records, it may not survive scrutiny.
What Records Should Lenders Keep On File When Relying on a MAC Clause?
When relying on a MAC clause or other discretion-based event of default provision, retain:
- date the decision was made;
- who made it;
- the clause relied upon;
- facts and circumstances considered;
- reasons the contractual test was met;
- the decision reached.
In practice: credit committee minutes, internal memos, board resolutions, or a clear written approval trail.
Key Takeaways
Robust drafting gets you the right to act. Robust records get you the ability to prove you acted properly. Okroyan shows what happens when a lender has the first without the second: two default grounds lost, and a result that only held up because a fallback argument existed. Not every case will have one.
The decision in West One v Okroyan is a reminder that contractual rights alone may not be enough. Lenders should ensure that decisions made under MAC clauses and other discretion-based provisions are supported by a clear and well-documented decision-making process. Our Banking & Finance team works with lenders and businesses to structure lending arrangements, manage risk and navigate enforcement issues when they arise. If you would like to discuss the implications of this decision, contact us and we’d be pleased to help.
