September 25, 2020 - The LSTA was delighted to host a webcast this week “Third Party Agency in the Syndicated Loan Market: An Eye on 2020 and Beyond.” Gregg Bateman and Daphne Coehlo-Adam of Seward & Kissel joined Jonathan Ross of TMG Group to present the most important considerations for third party agents – to wit, ensuring that discretion is limited appropriately as the role is a creature of contract. A third party’s agent’s responsibilities are only as broad as the credit agreement provisions provide. In negotiating credit agreements – both at origination and when an agent is coming into a transaction as a successor agent – third party agents are ever mindful of ensuring that the actions they need to take come at the direction of Required Lenders or another lender representative.

The presenters clearly outlined that defaults, forbearance and refinancings are all transactions which warrant careful attention by third party agents. Typically, third party agents will not monitor or presume borrower default and will only be required to declare an event of default upon receipt of written confirmation of the default event.  In forbearance agreements, third party agents often act as the representative signing on behalf of the syndicate and must be careful to confirm that requisite lender consent has been received and that they reserve all lender rights and that they do not waive any of those rights in the agreement. The session also looked at a particular topical issue – LIBOR transition fallback language. There are a number of provisions of the ARRC amendment approach fallback language that require a level of agent discretion that third party agents are reluctant to exercise. However, the ARRC hardwired fallback language offers much more clarity and direction and therefore may be a smoother way forward for third party agents.

Click here for a webcast replay and supporting materials.