Creditors under an obligation, the performance of which is related to entrepreneurial activity and is secured by a lien, may conclude an agreement for the management of such lien. One of the creditors or a third party can become a manager, but always in the status of a sole entrepreneur or a commercial organization. Under a lien management agreement (let's call it LMA for short), the manager undertakes on his own behalf, but in the interests of creditors, to conclude a lien agreement with the lienee and exercise all the rights and obligations of the lienor, and creditors pay remuneration to the manager.
This legal model is not very popular in Russia, it is still undergoing changes and is being gradually improved. The main purpose of concluding such agreements is to share risks between lenders (most often banks) when issuing a large loan amount in favor of a company. This relationship is also known as a syndicated loan.
New collateral management rules came into force in July.
What changes has been made?
- For the lien manager, an additional obligation has been introduced to maintain the register of creditors, reflecting the grounds, the amount of claims.
- An obligation has also been established for the manager to open a nominal account - money will be transferred to it in fulfillment of obligations under the lien agreement. The manager, like other creditors, can be the beneficiary of this account, and is obliged to indicate this information when recording the collateral.
- It is now provided that in the event of termination of the rights of any of the lienors, the lien management agreement is automatically terminated with this lienor, unless otherwise provided by the agreement or follows from the essence of obligation.
- If the creditors are also parties to the syndicated loan agreement, then in the event that a bankruptcy case is initiated against the lienee, the powers to exercise the rights of the lienors arising from a single claim are transferred to the credit manager under the agreement of such a syndicated loan.
- It is established that LMA may initially contain the consent of the manager to replace any creditor in the implementation of the assignment of rights under the obligation secured by the pledge.
If your business needs significant financial support, contact TEAM for professional advice on the prospects for obtaining a loan and issuing the relevant documents.