We represent and advise lenders, investors and borrowers on a wide variety of matters.
If, as a lender, you are looking to minimise the risk for any loan made and/or perhaps have other interested parties who wish to take a share of your loan, you may look to syndicate or seek participators in the loan arrangement you have made. It is important to look at this carefully as the relevant syndication/participation agreement will deal with who takes the lead role as lender and is responsible for dealing with the borrower.
Any documentation will need to deal with how enforcement action is taken, how monies are to be dealt with and how decisions are taken as between all the lenders so that the lead lender has sufficient instructions to take matters forward with the borrower.
It is also important to give thought to how the security is to be “shared” with the other lenders; for example, will it be held on trust for all the lenders but in the name of one of the lenders?
The due diligence carried out by the original lender will also need to be reviewed by the participators and consideration will need to be given as to whether the due diligence may be relied on by new participators.