Market Flash - UK Supreme Court Hands Down Judgment on Loan Market Association Standard Terms for Loan Trading

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March 16, 2015

On the 11th of March 2015, The Supreme Court of the United Kingdom found that a prepayment premium paid after the settlement date of a secondary loan trade documented under the Loan Market Association standard terms and conditions for par trade transactions is entirely for the benefit of the new lender and should not be apportioned among previous holders of the corresponding loan interest. Accordingly, a seller of loans should factor into the purchase price any future prepayment premiums or similar fees due (or potentially due) under the credit agreement or otherwise clearly state their allocation in the trading documentation.

In this Market Flash, Richards Kibbe & Orbe partner Matthew Hughes discusses Tael One Partners Limited's appeal, the UK Supreme Court decision and the effects on the participants in the secondary loan market.

Please click here to read the Market Flash.