Cleary Gottlieb on Latest Developments in European Leveraged Finance

EVOLUTION OF THE TRANSFERABILITY CLAUSE

Early 2000s

  • Lenders’ freedom to transfer their participations in large leveraged loans has been gradually eroded by developments introduced through the last few credit cycles.
  • By the time of the pre-crisis peak in 2007/2008, the provisions governing freedom to transfer had settled on the following:
    • Transfers had to be to “another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets”.
    • Borrower consent to any transfer was required (which

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