8 Key Responsibilities of Administrative Agents in Bankruptcy
When a borrower declares bankruptcy, the responsibilities of an administrative agent in a syndicated loan facility include:
- Continued Administration: The administrative agent continues to manage the loan facility, including processing payments, maintaining the loan register, and communicating with lenders and the borrower. 37
- Coordination with Lenders and Counsel: The agent coordinates with lenders and their counsel to address issues related to the bankruptcy, including reviewing and commenting on documents filed in bankruptcy court, such as the borrower's reorganization plan. 5
- Proof of Claim: The administrative agent may need to prepare and file a proof of claim on behalf of the lenders to ensure their interests are represented in the bankruptcy proceedings. 56
- Information Sharing: The agent facilitates information sharing between the lenders and the borrower, ensuring that all parties are informed about the status of the bankruptcy and any relevant developments. 7
- Enforcement Actions: Acting at the direction of the lenders, the administrative agent may need to take enforcement actions, such as declaring events of default, enforcing remedies, and foreclosing on collateral. 6
- Assistance in Restructuring: The agent may assist in the restructuring process, including facilitating additional funding, reviewing collateral and covenant compliance, and analyzing restructuring proposals. 5
- Tax Reporting: The administrative agent continues to handle tax reporting responsibilities, including withholding taxes and reporting payments to the Internal Revenue Service. 7
- Successor Agent Considerations: In some cases, the administrative agent may need to consider resigning or may be removed by the lenders, leading to the appointment of a successor agent. 6