The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
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 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.
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:
strengths and weaknesses of the assets
whether information on these can be disclosed to bidders
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
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