Key issues in loan transfers
Key issues in loan transfers

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Key issues in loan transfers
  • Methods of transferring loans
  • Transfer provisions—key issues
  • Consents
  • Confidentiality
  • Transfers overseas
  • Transfers of unsecured debt to a secured lender

There are times when a lender might want to get back some of the money it has lent to a borrower before the borrower is due to repay it.

If the borrower is performing its obligations under the loan agreement, the lender cannot demand early repayment of the loan or take any steps to recover amounts from the borrower. The only option therefore, is to look to transfer the loan to another lender.

This Practice Note considers:

  1. the main methods of transferring a loan under English law

  2. key transfer provision issues, and

  3. transfers to other jurisdictions

Transferring the loan might be the objective from the outset of the transaction if, for example:

  1. there is insufficient time to get a syndicate of lenders together at the start of the transaction so that one lender has to make the initial advance with a view to forming a syndicate later

  2. a lender wants to boost its profile by being seen to participate in a significant or 'iconic' transaction with the intention of off-loading the risk once it has added value to its reputation (eg the financing for the development of Wembley Stadium), or

  3. a lender sees an opportunity to charge a lucrative underwriting fee and then exit the transaction once the fee has been paid

Alternatively, a lender might plan to be involved for the duration of