Jurisdiction(s):
United Kingdom

LMA distressed secondary bank debt/claims: pre-trade due diligence and key elections on transfers, settlement, interest, DSC, unfunded commitments, tax/regulatory issues (including 2026 updates)

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The Loan Market Association (LMA) has issued refreshed versions of the standard terms and conditions for Par and Distressed Trade Transactions, the complete suite of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide, all coming into force on 17 March 2026. Changes comprise the deletion of LIBOR references, updates to IBOR rate definitions and the Target2 definition, plus revised ERISA representations that fold in further exemptions to the prohibited transaction rules under ERISA and the US Internal Revenue Code. The new materials are accessible solely to LMA members via the LMA’s Documentation Hub.

Summary

A core principle of trading under the LMA protocol is that ‘a Trade is a Trade’: once a trade is concluded (which may include an oral agreement reached by telephone), it is binding, and later events that may disadvantage one or both parties do not permit either side to rescind or ‘break’ it. For instance, not securing consent for an assignment or novation of the debt does not render the trade void...

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Jacqui Allen

Mandel, Katz & Brosnan LLP

Jacqui Allen heads the London office of Mandel Katz & Brosnan. Jacqui's practice focuses on the secondary loan trading markets and providing advice on the legal issues relating to the purchase and sale of distressed assets. Jacqui has been actively involved in the loan trading market since 1997 and has had extensive experience in various types of high-yield transactions throughout the world, including the purchase and sale of distressed and par loans, trade claims and loan restructurings. In addition, Jacqui concentrates on representing banks, hedge funds and other financial institutions that purchase and sell distressed assets in emerging and established markets in Europe, Asia and Australia....

Web page updated on 20/05/2026

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