Syndicated Loan Facilities With Lenders and Agents Facing Default

Minimizing Risks for Co-Lenders and Borrowers Through Credit Agreements and Post-Default Remedies

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, April 6, 2010

Recorded event now available

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Program Materials

This CLE webinar provide guidance to counsel for borrowers and co-lenders to respond to defaulting lenders or administrative agents. The panel will review remedies against a defaulting lender, drafting agreements to minimize risks, and the impact of bankruptcy and FDIC receivership on borrowers and co-lenders.

Description

As banks and other lenders face financial instability, lender defaults in syndicated credit facilities continue to be a concern. While the risks of defaulting lenders primarily affect the remaining members of the syndicate, the borrower must also address certain issues at the time the loan is made.

Events of the last few years demand heightened attention to defaulting lender provisions of credit agreements. In the current market environment, minimizing the risks of a defaulting lender is critical in drafting credit agreements.

If a lender ends up in bankruptcy or FDIC receivership, special rules apply and co-lender and borrower’s remedies are more limited. The Lehman bankruptcy provided insights into how the bankruptcy courts will handle the bankruptcy of an administrative agent.

Listen as our authoritative panel of attorneys addresses the risks associated with defaulting lenders and agents in syndicated credit facilities, discusses remedies against the defaulting lender, offers best practices for drafting credit agreements, and reviews the impact of bankruptcy or receivership.

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Outline

  1. Borrower’s risks and remedies
    1. Voting rights
    2. Commitment fees
    3. Replacement of lender
    4. Termination of lender
    5. Breach of contract
  2. Lender and administrative agent risks and remedies
    1. Definition of defaulting lender
    2. Definition of impaired lender
    3. Letters of credit and swingline loans
    4. Payment priority
    5. Other lenders funding the defaulted piece
    6. Non-ratable reduction of commitments
    7. Defaulting administrative agents
  3. Bankruptcy and Receivership
    1. FDIC rules
    2. Bankruptcy rules — relief from automatic stay
    3. Lehman as syndicated agent in bankruptcy

Benefits

The panel will review these and other key questions:

  • How can the definitions of "defaulting lender" and "impacted lender" affect the remedies of borrowers and co-lenders against defaulting lenders?
  • What particular risks do swing line and issuing lenders face?
  • What provisions should be added to existing credit agreements to provide maximum protection and flexibility to borrowers and co-lenders?
  • How does the automatic stay of bankruptcy or FDIC rules affect the rights of borrowers or co-lenders to amend the credit agreement?
  • How did the bankruptcy court handle the credit facilities where Lehman was administrative agent?

Faculty

Susan C. Alker
Susan C. Alker

Partner
Reed Smith

She has extensive experience representing major banks, financial institutions, private equity funds and hedge funds...  |  Read More

Catherine Ozdogan
Catherine Ozdogan

Partner
Bracewell Guiliani

Her practice focuses on commercial lending and financial transactions. She has extensive experience representing...  |  Read More

Colleen H. McDonald
Colleen H. McDonald

Partner
Reed Smith

She specializes in securitization, structured finance, commercial finance transactions and complex financial...  |  Read More

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