Default interest rates under scrutiny

The enforceability of default interest clauses has long been a critical issue for lenders and investors in the private debt market. Donna Newman and Peter Sequeira of Stephenson Harwood examine the lessons from Houssein v London Credit.

Donna Newman

Recent guidance from the English High Court in Houssein and others v London Credit Ltd and others [2025] EWHC 2749 (Ch) has provided much-needed clarity on when a default interest rate crosses the line into being an unenforceable penalty. For fund managers, lenders and legal teams, this decision is a timely reminder to revisit the structure and justification of default interest provisions in facility agreements.