Liz Osborne

Transferability: does there need to be a re-balance?

In the period leading up to (and during) a default or distress, the ability to trade loan positions takes on renewed significance, with transferability provisions in sharp focus. In recent years, the move towards more borrower/sponsor friendly documents has resulted in more restrictive “approved” lists and blanket restrictions on transfer to certain types of transferees (without consent). With those constraints driving more limited liquidity in the secondary market, it may be time to reflect on the extent of transfer restrictions, particularly where in practice, it may be beneficial to a borrower to move the debt away from the traditional lenders.