Types of borrowers

The most common types of borrowers that might wish to borrow money are:

• • companies;
• • partnerships;
• • trusts;
• • individuals; and
• • unincorporated associations.

This guidance note gives a brief outline of the types of borrowers and the relevant legislation. It also briefly refers to the “Know your customer” checks that a lender must apply to a borrower or any party to a transaction under anti-money laundering and counter-terrorism financing obligations.

See Types of borrowers.

The finance parties

The key finance parties involved in a syndicated loan arrangement or syndicated loan facility are the lenders, the agent, the security trustee, the arranger and any hedge counterparties. This guidance note considers the roles and duties of these key parties with reference to the Asia Pacific Loan Market Association (APLMA) Australian form of loan documentation.

See The finance parties.

The facility agent

This guidance note covers the duties and role of the facility agent (defined in the Asia Pacific Loan Market Association (APLMA) documentation as the agent) in a syndicated loan agreement, with reference to relevant provisions in the APLMA Australian secured term and multicurrency revolving syndicated facility agreement.

It also considers the rights of the agent and methods it may employ to protect itself and exclude liability whilst carrying out its role as agent. The guidance note also considers the mechanisms for the appointment and resignation of the agent.

See The facility agent.

Finance party default — facility agent

In times of financial crisis, it is not just borrowers who are under financial pressure. Finance parties (eg lenders, facility agents and security trustees) are also at risk of getting into financial difficulty. Facility documents have developed over time (particularly as a result of the financial crisis which began in 2008) to deal with issues raised by the credit risk of the finance parties.

Facility agents play a crucial role in the mechanics and administration of syndicated facility agreements. If they do not perform their duties, both the lenders and the borrower can be adversely affected.

This guidance note explains the key issues involved where a facility agent is in financial difficulty, including:

• • the key areas of concern in relation to the facility agent's role in syndicated facility agreements;
• • the key elements of common provisions in facility agreements which are included to deal with the credit risk of the facility agent; and
• • points to note when dealing with a facility agreement which has an impaired facility agent.

Where appropriate, this guidance note highlights relevant provisions in the highlights relevant provisions in the APLMA Australian secured term and multicurrency revolving syndicated facility agreement.

See Finance party default — facility agent.