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Structuring Loan Participation Agreements, Conducting Lender Due Diligence: Strategies for Lead Lenders and Participants to Minimize and Manage Risk of Participations and Sales

A CLE Webinar - Presented by Strafford Publications

March 21, 2017

Speakers: James C. Schulwolf

March 21, 2017


James C. Schulwolf, Partner
Shipman & Goodwin, Hartford, CT

Jeffrey A. Wurst, Partner
Ruskin Moscou Faltischek, Uniondale, NY

Alison R. Manzer, Partner
Cassels Brock & Blackwell, Toronto, ON

This CLE webinar will discuss current trends in the loan participation market, drafting key provisions of participation agreements and effective due diligence for lenders, including recent FDIC regulatory guidance regarding risk management for purchased loans and purchased loan participations.

Banks and other lenders have historically purchased loan participations to achieve growth, employ funds, diversify credit risk, and deploy liquidity. Litigation between originating and participating banks are highlighting the critical nature of the loan participation agreement in protecting the interest of all parties to the transaction.

Key provisions of the participation agreement include, among other things, lender voting and other rights and obligations of each party to the participation, seller representations and warranties, transfer provisions, and reclaiming or buying back the transferred fund.

The FDIC, in its Financial Institution Letter 492015, sets out the risks of loan participations originated by non-bank lenders and provides guidance for lender due diligence in managing risks associated with these transactions. The agency’s concern is that banks rely on these alternative lenders to underwrite the loan origination without proper review and analysis of the underwriting models of these alternative lenders.

Listen as our authoritative panel of finance practitioners looks at the current state of the loan participation market, and discusses best practices for drafting or reviewing key provisions of participation agreements and effective due diligence for lenders. The panel will also discuss the FDIC’s Financial Institution Letter (FIL492015) regarding lender risk management for purchased loans and purchased loan participations as well as discuss some recent case studies related to loan participations.


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