Insights

Washington, D.C. – May 30, 2024: Crowell & Moring hosted its 25thannual George Bailey Public Service Awards ceremony. Named after the hero of the classic movie, “It’s a Wonderful Life,” these awards recognize the firm’s lawyers and staff who have made a substantial impact on the lives of others through their pro bono work.

New York – April 1, 2021: Crowell & Moring and Kibbe & Orbe have joined forces effective today to provide expanded service offerings to clients in the financial services industry.  Twenty-four lawyers from the storied financial law firm are now part of Crowell & Moring’s New York, London, and Washington, D.C. offices, including Jennifer Grady, managing partner and chair of the firm’s executive committee, who will co-chair Crowell & Moring’s Corporate practice; three founding partners, Jonathan Kibbe, William Orbe, and Michael D. Mann, and the managing partner of the London office, Andrew M. Martin.

In the ever-evolving landscape of English law credit agreements in the European leveraged loan market, the dynamics of lending have undergone significant transformations in the last few years. One issue that has gained prominence is the increase in limits on the ability of lenders to transfer their loans and the associated restrictions imposed on potential new lenders. European syndicated loan agreements have historically included a standardised and expected set of transfer restrictions applicable to prospective lenders, reflective of the market guidance and templates issued by the Loan Market Association (“LMA”). Certainty of terms and the capability of an existing lender to sell out of a loan position have been the hallmark (and expectation) of the LMA loan market. However, trends in the drafting of credit agreements have contained a concerning increase in limitations on loan liquidity. As a result, many lenders are finding it difficult to sell their distressed loans. This article explores these trends, as well as their implications on the secondary loan trading market.

Settlement certainty is a required feature of any global credit market. The secondary loan market aspires to that goal; however, ensuring absolute certainty of settlement has proven elusive due to several reasons, including the complexity of the underlying loan product. There are no robust electronic settlement platforms, transfer documentation is negotiated between counterparties, definitions of “eligible assignee” vary by credit agreement, and borrower-generated confidential lists of disqualified lenders, pre-qualified “white-listed” lenders and ineligible competitors further confuse the overlapping sets of entities that can or cannot become members of the lending syndicate. Numerous consents to transfer a loan may be required, including consents from the borrower, the administrative agent, the letter of credit issuer and other interested parties. And even if these hurdles are overcome, transfers of loans may be arbitrarily “frozen” by a borrower or administrative agent during a lengthy reorganization or restructuring.

Any party active in the global secondary loan market will, at some point, come across questions or concerns involving the formation of a binding contract. These may be questions regarding whether an agreement to trade was made, what terms of the trade had been agreed, or even how the rules of contract formation apply to a telephone call, email or instant message conversation. In this global market the first question is: which country’s law governs contract formation? The second question is whether oral trades are enforceable in that jurisdiction.