Structuring Loan Participation Agreements, Conducting Lender Due Diligence
Strategies for Lead Lenders and Participants to Minimize and Manage Risk of Participations and Sales
Recording of a 90-minute CLE webinar with Q&A
This CLE webinar will discuss current trends in the loan participation market, drafting key provisions of participation agreements and effective due diligence for lenders, including recent FDIC regulatory guidance regarding risk management for purchased loans and purchased loan participations.
- Overview of loan participations
- Market trends
- What is a “participating interest?”
- What are the key characteristics?
- Key participation agreement provisions and how they differ from Syndications
- Lender voting rights
- Defaulting lenders
- Borrower workouts, foreclosures
- Seller reps and warranties
- Reclaiming or buying back transferred funds
- Specific considerations
- Circumstances in which a loan participation can be regarded as a “true sale” of the underlying loan
- Circumstances in which a participated loan may be subject to another’s security interest.
- Automatic Perfection
- Settlement conventions/implications of delayed settlement; how loan sellers may obtain settlement liquidity coverage
- Lender due diligence
- Understanding and reducing the selling counterparty risks
- Considering the participation structure and lender rights risks
- How much do you review of the deal and how much using representations
- FDIC FIL492015:
- Advisory on Effective Risk Management Practices for Purchased Loans and Purchased Loan Participations
The panel will review these and other key issues:
- What lessons can be learned from recent litigation regarding loan participation agreements for lenders in drafting or reviewing such agreements?
- When will a loan participation be regarded as a “true sale” of the underlying loan?
- What specific information should participants or purchasers obtain from the lead lender or seller prior to entering into the transaction?
- What guidance does the FDIC provide banks in performing due diligence to minimize risks of participations from alternative non-bank lenders?
Jeffrey A. Wurst
Ruskin Moscou Faltischek
Mr. Wurst is the chairman of the firm’s Financial Services, Banking, & Bankruptcy Department. He has... | Read More
Mr. Wurst is the chairman of the firm’s Financial Services, Banking, & Bankruptcy Department. He has significant expertise in asset-based lending, factoring, and all other areas of commercial finance, bankruptcy matters, workouts and turnaround situations. He is actively involved in the documentation of commercial finance and leasing transactions, as well as litigation that may arise out of or in connection with such transactions.Close
Alison R. Manzer
Cassels Brock & Blackwell
Ms. Manzer is a member of the Firm's Financial Services Group. Her practice encompasses a broad range of commercial... | Read More
Ms. Manzer is a member of the Firm's Financial Services Group. Her practice encompasses a broad range of commercial practice in the financial services sector, including financial institution regulation, corporate and commercial lending, asset-based financing, securitization and structured finance, private equity, project finance, asset finance and leasing, business reorganization, syndicated lending and related areas. A significant part of her practice involves multi-jurisdiction transactions where she has expertise in the structuring requirements of financing, investment and securitization transactions to solve taxation, conflicts of laws, document structure, currency and rate issues, among others.Close
James C. Schulwolf
Shipman & Goodwin
Mr. Schulwolf represents senior and mezzanine lenders, venture capital investors (including SBIC’s), private... | Read More
Mr. Schulwolf represents senior and mezzanine lenders, venture capital investors (including SBIC’s), private equity funds, hedge funds, emerging growth companies and private companies in financing, investment, leasing, acquisition, corporate, licensing and restructuring transactions. He regularly advises these clients with respect to structuring, negotiating, and closing complex transactions.Close