Contents

Cases

Statutes

Figures

Preface

Acknowledgments

Abbreviations

1 Multi-bank Financing: What It Is and Is Not

INTRODUCTION

MULTI-BANK FINANCING

Basic Transactions

Complex Transactions

MULTI-BANK FINANCING CONTRASTED WITH SIMILAR FINANCING TECHNIQUES

Introduction

Multi-bank Financing Contrasted with Syndications and Participations (Debt v Equity)

Multi-bank Financing Contrasted with International Bonds

Multi-bank Financing Contrasted with Securitization

Multi-bank Financing Contrasted with Commercial Paper Programs

Multi-bank Financing Contrasted with Note Issuance Facilities

Multi-bank Financing Contrasted with Unit Trusts

Multi-bank Financing Contrasted with Broadly Syndicated Loans

CONCLUSION

2 Multi-bank Financing: Who Uses It, Where, and Why

INTRODUCTION

THE PARTIES: WHO USES MULTI-BANK FINANCING?

Borrowers

The Lenders

COMPONENTS OF THE FINANCIAL MARKET: WHERE MULTI-BANK FINANCING OCCURS

Domestic Market

Foreign Market

Eurocurrency/International Financial Market

THE RATIONALE: WHY PARTIES USE MULTI-BANK FINANCING

The Borrower

The Banks

CONCLUSION

3 Overview of Relevant Areas of Law

INTRODUCTION

CHOICE OF LAW

RELEVANT GENERAL PRINCIPLES OF LAW

Introduction

Set-off

Insolvency

Methods of Transferring or Co-owning Property

CONCLUSION

4 The Mechanics of Arranging Loan Syndications and Loan Participations

INTRODUCTION

THE MECHANICS OF ARRANGING LOAN SYNDICATIONS

Sourcing the Loan

Structuring the Loan

Selling the Loan

THE MECHANICS OF ARRANGING LOAN PARTICIPATIONS

Loan Participation Procedures

Liability Arising from the Selling Process

CONCLUSION

5 The Financial Accommodation Facilities Used in Loan Syndications and Loan Participations

INTRODUCTION

DIRECT LOANS

Money Loans

Overdraft Facilities

COMMERCIAL LETTERS OF CREDIT

Overview of Letters of Credit

Syndications of Letters of Credit

Participations of Letters of Credit

BANK GUARANTEES

Introduction

Syndications of Bank Guarantees

Syndications of Direct Pay Standby Letters of Credit

Participations of Bank Guarantees

BANKERS' ACCEPTANCES

Bankers' Acceptances as a Funding Facility

Syndications of Bankers' Acceptances

Participations in Bankers' Acceptances

CONCLUSION

6 Legal Relations Between the Parties in Loan Syndications

INTRODUCTION

CONTRACTUAL PROVISIONS IN A SYNDICATED LOAN AGREEMENT

Definitions

Amount and Availability of the Credit

Payment, Repayment, and Prepayment

Security, Guaranty, and Insurance

Conditions Precedent

Representations and Warranties

Covenants

Events and Consequences of Default

Miscellaneous Provisions

THE CHARACTERIZATION OF THE SYNDICATION ARRANGEMENT

Importance of Proper Characterization

Characterization of the Syndication Arrangement

CONCLUSION

7 Legal Relationships Between the Parties In loan Participations

INTRODUCTION

PARTICIPANT-BORROWER RELATIONSHIP

PARTICIPANT-PARTICIPANT RELATIONSHIP

LEAD BANK-PARTICIPANT RELATIONSHIP

Form of the Participation Agreement

Contents of the Participation Agreement: Contractual Rights and Duties

CONCLUSION

8 The Characterization of the Participation Arrangement

INTRODUCTION

RESOURCE MATERIALS

Extracts from Participation Agreements

Canadian Case Law

ANALYSIS

Agency

Trust

Partnership or Joint Venture

Ownership in Common or Tenancy in Common

Debt Theory: Creditor-Debtor Relationship

Sale Theory: Assignor-Assignee Relationship

ECONOMIC CONSEQUENCES OF CHARACTERIZATION

Borrower's Insolvency

Lead Bank Insolvency

Participant's Insolvency

CONCLUSION

9 Rights And Duties of the Agent Bank in Loan Syndications and Loan Participations

INTRODUCTION

CONTENTS OF THE AGENCY CLAUSE

Appointment and Authorisation

Duties of the Agent Bank

Authority of the Agent Bank

Limitation on Liability

Conflicts of Interest

Additional Remuneration

Use of Confidential Information

Reimbursement and Indemnification of the Agent

Termination and Replacement of the Agent Bank

GENERAL APPROACH TO THE AGENT BANK'S LEGAL STATUS AND FUNCTIONS

True Agent or Special Agent Debate

Analysis

CONCLUSION

10 Securities Regulation Issues in Loan Syndications and Loan Participations

INTRODUCTION

OVERVIEW OF THE SECURITIES REGULATION SCHEME

BANKS IN A CHANGING LEGAL ENVIRONMENT: A BRIEF OVERVIEW

U.S. National Banks and Securities Activities

Canadian Banks and Securities Activities

THE INTERFACE BETWEEN LOAN SYNDICATIONS AND LOAN PARTICIPATIONS AND THE SECURITIES LAWS

United States

DO LOAN PARTICIPATIONS INVOLVE A SECURITY?

Canada

CONCLUSION

11 Accounting and Tax Issues in Loan Syndications and Loan Participations

INTRODUCTION

ACCOUNTING ISSUES IN LOAN SYNDICATIONS AND LOAN PARTICIPATIONS

Sources of Information

General

Rulings and Guidelines

TAX ISSUES IN LOAN SYNDICATIONS AND LOAN PARTICIPATIONS

General

Tax Issues Affecting the Borrower

Tax Issues in Loan Syndications

Tax Issues in Loan Participations

ALL PARTIES RESIDENT IN CANADA

CONCLUSION

12. Conclusion

SUMMARY

FUTURE DIRECTIONS

General

The Conceptual-Functional Approach to Multi-bank Financing

Codification, Harmonisation, and Legislation for Loan Participations?

APPENDICES

A: Syndicated Facility Agreement

B: Master Participation Agreement

C: Format Participation Agreement

D: Standby Letter of Credit

Notes

Bibliography

Index

A

B

C

D

E

F

G

H

I

J

L

M

N

O

P

Q

R

S

T

U

W