Methods of Participation Transfer
Alpha Bank (“Alpha”) is proposing to transfer all of its participation in a bilateral loan to Hector Bank Limited (“Hector”). The Borrower under the syndicated loan is Troy Inc (“Troy”) with whom Alpha has extensive banking relationships. Troy also holds significant deposits with Alpha but has no existing banking relationship with Hector.
The underlying loan agreement includes the following provision: “The consent of the Borrower is required for an assignment or transfer by a Lender provided that the consent of the Borrower to an assignment or transfer must not be unreasonably withheld or delayed”.
Advise Alpha as to the various methods of transfer that can be used to effect the transfer of its participation in the loan to Hector as a matter of English law. In your answer, you should identify the advantages and disadvantages of each method of transfer you identify.
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