If your organization is not a member of the LMA, you can still consult (but not access) the list of available documents by clicking here. It is important to recognize that LSTA settlement documents do not contain an ipso facto clause allowing a party to terminate the contract with its counterparty upon bankruptcy petition by its counterparty, as such ipso facto clauses are generally unenforceable in the United States.23 However, under English law, ipso facto clauses are generally enforceable.24 In a contract governed by English law, A counterparty retains the right: terminate the contract if the contract contains a right of termination in the event of insolvency of its co-contractor. This is a significant difference from U.S. bankruptcy law. The specific representations and warranties made by the parties in the LMA and LSTA documents are generally similar. In a peer trade, when the loan is executed and the risk of the loan subsequently becoming non-performing is low, the assurances and guarantees that a seller must give to his buyer are usually limited. For LMA and LSTA transactions, Seller provides Buyer with a good representation of title at the settlement date and warrants that Seller alone has legal and economic ownership of the loans, free from adverse privileges, charges or claims against securities of any kind. If there is a significant vote or decision to be made regarding an upcoming change, offer of rights or restructuring proposal and the buyer wishes to instruct the seller on how to behave, the buyer must agree with the seller at the time of negotiating these directional rights. Without amendments, neither the LSTA nor LMA documents require the seller to take instructions from the buyer with respect to changes or modifications to the credit agreement that occur during the period following the trading date and before the settlement date.11 However, it is often common for a seller to consult with his buyer about that buyer`s preference if significant action is taken after the date of negotiation, but takes place before the settlement date of a loan (e.g. extension of maturity, release of collateral, waiver of late payment, etc.). These documents (this term includes, where the context permits, text, content, macro spreadsheets and electronic interfaces, as well as underlying assumptions, conversions, formulas, algorithms, calculations and other mathematical and financial techniques) are provided to members of the Loan Market Association in accordance with the bylaws of the Loan Market Association (a copy of which is available here), facilitate the documentation of transactions in credit markets. The Loan Market Association, Allen & Overy or Clifford Chance accept no liability for the use of these materials or for any loss, damage or liability arising from such use. None of the parties to the Loan Market Association, Allen & Overy, or Clifford Chance has reviewed the laws of any jurisdiction that may apply to any of the parties to an agreement using these documents and their subject matter.
Members should therefore consider all relevant legal, accounting and regulatory matters before using these documents or entering into any transaction between them and, where appropriate, consult with their professional advisers. Jurisdiction of the borrower. If the borrower`s organization and primary location is outside the United States, TMD documentation is generally used. LSTA documents will most likely be used if the borrower is primarily resident and organized in the United States. LMA transactions involve additional assurances and guarantees from seller to buyer (thus creating greater exposure to the seller compared to LSTA transactions per transaction). These additional representations and warranties include: (i) to the best of the seller`s knowledge, the loans have not been accelerated by the lenders and no default on principal or interest has occurred; (ii) neither the Seller nor any of its legal predecessors have executed any other document that could materially and adversely affect the Loans; (iii) neither the seller nor any of its predecessors in title is in default with respect to its obligations with respect to the loans and related rights sold; and (iv) the Loans and the rights attached to the Loans are free of any compensation in favour of the Borrower. None of the foregoing representations and warranties are generally given by a seller when selling loans based on LSTA documentation. It should be noted, however, that all of the foregoing representations and warranties are made by a seller (solely on its own behalf and not by a previous seller) transferring credits in accordance with the LSTA Distressed documentation (except for assurance that no defects will occur).