How Administrative Agents Facilitate Loan Sales and Monetization
Administrative agents play a crucial role in facilitating the sale or monetization of lenders' claims in syndicated loan facilities. Here are some key points:
- Assignment and Assumption Agreements: Administrative agents process assignment and assumption agreements, which are used to transfer loan positions between lenders. This includes updating the loan register to reflect the new ownership and ensuring that payments are directed to the correct parties. 24
- Loan Trades: The administrative agent facilitates loan trades by coordinating with the buyer and seller, processing the necessary documentation, and updating the loan register accordingly. This ensures that the transfer of claims is properly recorded and that payments are accurately directed. 24
- Proof of Claim: In the event of bankruptcy, the administrative agent may prepare and file proofs of claim on behalf of the lenders, which is essential for asserting their claims in the bankruptcy proceedings. 13
- Distressed Loan Sales: Administrative agents can assist in the sale of distressed loans by facilitating the transfer of claims and ensuring that all necessary documentation is in place. This includes the use of distressed purchase and sale agreements (PSAs), which are designed to transfer economic ownership of the loan and allocate certain risks between the parties. 1
- Successor Agent Agreements: If an administrative agent resigns or is removed, a successor agent agreement is used to appoint a new agent. This process includes transferring the loan's books and records, assigning security interests, and updating the loan register to reflect the change in agency. 48