Loan Market Association
The Loan Market Association (LMA) is an association founded in London and there sitting advocacy group in the form of a non-governmental organization , which now has more than 600 members from the finance , in particular banks , financial investors and international law firms has.
purpose
The LMA was founded in December 1996 in order to promote the European market for syndicated loans , which was still young in the 1990s, by means of a generally recognized sample contract documentation and thus to establish a common market practice in the primary and secondary market for syndicated loans. To the international credit transactions now widespread and the standard accepted model contracts include in particular those syndicated loan for general corporate financing ( English investment grade ), for acquisition financing ( English leverage finance ) and non-performing for the sale of receivables ( English non-performing loans ).
Content of the contract
The contracts are structured according to the Anglo-Saxon case law and define any situation even considered unlikely. For example, the contract patterns include provisions for the case of a rare market disorder ( English market disruption ). Certain minimum building blocks ( English boiler plates ) deal with the legal issues relevant to the contract . Since quotations from statutory provisions or from general terms and conditions are unusual, these components are repeated in the contract, which means that the contract can easily reach 100 pages and more.
The central component, which is usually no longer dealt with in individual cases, are the clauses . The borrower is in this case the lender committed to assurances that aim, the original business foundation in the loan approval during the repayment term to maintain. There are assurances that the borrower have already fulfilled before disbursement / provision of credit must ( English conditions precedent , see payout requirement and conditionality ) and those that he has observed continuously during the repayment term ( covenants in the narrow sense). The borrower makes assurances to the lender in the form of non-financial covenants through positive , negative or equal ranking clauses ( pari passu clause ), which prohibit the subsequent provision of collateral to other creditors, unless the lender is treated on an equal footing. This also includes the material adverse change clauses , which use individually listed examples to define a significant deterioration in the economic and / or legal situation of the borrower and, if they occur, trigger additional collateral obligations or even a loan termination . The latter also applies to cross-default clauses if the debtor violates contracts with third party creditors, or in the case of a change of control that is intended to prevent a significant change in shareholders. In addition, the borrower hereby undertakes to provide the lender with precisely specified information on specific dates (e.g. quarterly reports , confirmations of compliance with at least the financial covenants). Liability clauses stipulate that the consortium any responsibility for the adequacy ( english appropriateness ), accuracy ( English accuracy ) and completeness ( English complete ness ) agreements reached accepts (para. 32.8a model contract). An exclusion of liability is also required according to No. 32.8b Standard contract for the legality ( English legality ), validity ( english validity ), efficacy ( English legal efectiveness ) and enforceability ( English enforceability ) provided by financing documents. Such legal risks can legal opinion ( English legal opinion ) are excluded.
When granting loans to group subsidiaries , banks in Germany often make use of the tax group declaration in order to oblige the parent company to compensate for losses at the borrowing subsidiary for the entire financial year . To loans about the future as part of the credit trade to transfer to other lenders in the loan agreements so-called assignment clauses included ( English Transferable Loan Facilities ).
Before the payout is the contracted loans have the borrower or third parties certain conditions precedent ( English conditions precedent to fulfill). This includes documents that relate to the verification of identity (in the case of companies by means of articles of association and extract from the commercial register , in the case of natural persons by verification of identity) and any lending documents .
Comparable organizations
The American counterpart to the LMA is the Loan Syndications and Trading Association. In Germany there is no organization comparable to the LMA. The task of making recommendations for the drafting of forms and contracts for the purpose of standardization in the German banking sector was taken on by the banking associations of the institute groups such as the Federal Association of German Banks , German Savings Banks and Giro Association , Federal Association of German Volksbanks and Raiffeisen Banks , Federal Association of Public Banks in Germany and Association of German Pfandbrief Banks for their member institutes. This task is also carried out by the associations in Switzerland and Austria .
However, the contracting parties are free to accept all or part of the contract models developed by the LMA. However, since these come from the Anglo-Saxon legal area , a possible collision with German law must be examined if a German place of jurisdiction is agreed within the framework of the conflict of laws .
