17.3.1 The Contract should generally not allow the Authority to assign or transfer its rights or obligations under the Contract without the consent of the Contractor.
17.3.2 The main exceptions to the above are where transfer either takes place under statute or is required to facilitate a public sector reorganisation. Specific exceptions may also have to be provided for in a particular project if a transfer is anticipated (e.g. the London Underground project which was, under statute, transferred to Transport for London) or particular sectors (e.g. certain public sector authorities where transfers may be required due to boundary changes). Authorities should recognise that financiers will be concerned to ensure that any transferee's covenant is as strong as that of the original Authority and that the transfer could not prejudice their security.247 If this is not the case, appropriate credit enhancement (e.g. in the form of a guarantee) may be required so that the Contractor's position is not prejudiced. Where such a right is required by the Authority, appropriate drafting for both central and non-central government projects is set out below.
Required drafting is as follows:
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247 Pursuant to the Enterprise Act 2002 (the "Act"), lenders to PFI transactions in England can benefit from exemption from the effect of the changes to the Insolvency Act made by the Act. This exemption in England may only be available to the extent that the PFI Contract is between the Contractor and a public body; accordingly, financiers in England will be concerned to ensure that the Contract cannot be transferred to a non-public body (whether or not any proposed non-public body transferee's obligations are guaranteed by a public body). However, it should be noted that the Insolvency Provisions of the Act are not directly attributable to Northern Ireland. The Insolvency (NI) Order 2005 largely mirrors the provisions of the Enterprise Act 2002 but all relevant persons are advised to take detailed advice in this area.