Loan portfolio sales—key issues
Loan portfolio sales—key issues

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

  • Loan portfolio sales—key issues
  • Due diligence—scope and purpose
  • Due diligence on loan assets
  • Due diligence on derivative assets
  • Due diligence on equity assets
  • Due diligence on security
  • Issues raised by ongoing restructurings
  • Issues relating to information
  • Other relevant considerations

This Practice Note considers some of the key issues which can arise on a loan portfolio sale and which may be relevant to banking law practitioners involved in large scale loan disposals. For information on the typical parties and process in a loan portfolio sale, see Practice Note: Loan portfolio sales—an introduction and for information on the legal documentation used, see Practice Note: Loan portfolio sales—legal documentation.

For further detail on the types of issues which may arise on single asset debt trades, see Practice Note: Key issues in loan transfers.

Due diligence—scope and purpose

Due diligence will be critical to both the seller and the buyer and will consist of legal, financial and commercial due diligence. This Practice Note focuses on legal due diligence.

Seller's perspective

The seller will undertake legal due diligence very early on in the process. For more information, see Practice Note: Loan portfolio sales—an introduction — Transaction process for a loan portfolio sale. So that it can structure its portfolio for sale, it needs to understand:

  1. strengths and weaknesses of the assets

  2. whether information on these can be disclosed to bidders

  3. how (and whether) they are capable of transfer

Note that in terms of financial due diligence, sellers will want to have a clear idea of the value of the assets they are proposing to sell. Credit analysis