Mandel, Katz & Brosnan LLP

This Practice Note explains the key provisions of the Loan Market Association (LMA) standard terms and conditions for par and distressed trade transactions (bank debt/claims) for use by parties to a secondary debt trade. It also looks at the different treatment under the LMA’s standard terms and conditions of par and distressed debt trades and claims trades.

This Practice Note explains the key Loan Market Association (LMA) documents that are used in a typical secondary debt trade transaction including confidentiality agreements, trade confirmations and the LMA Standard Terms and Conditions. It also explains the different types of transfer, assignment and sub-participation agreements which are used to transfer any debt which is traded. The Practice Note covers both par trades and distressed trades

This Practice Note explains (1) what sub-participation means, (2) the different types of sub-participation (funded sub-participation and unfunded sub-participation or risk sub-participation), (3) key considerations when entering into a sub-participation, and (4) a discussion of the Loan Market Association standard form Participation Agreement.

This Practice Note considers how the possession of information (particularly confidential and material non-public information) impacts on the secondary loan market. In particular, it considers whether loan trading is a regulated activity, the use of information barriers and ‘Big Boy’ letters in the secondary loan market and the relevant market guidelines issued by the LMA and other trade associations in relation to the handling of sensitive information by participants in the secondary loan market.