Loan Participations

  • Overview
  • Attorneys

Kutak Rock actively represents domestic and foreign banks, savings institutions, insurance companies, financial guarantors, government-sponsored enterprises and other financial institutions in a wide variety of financial transactions. Our team has extensive experience representing clients as lenders and as providers of credit enhancement or liquidity support for publicly traded debt securities. These transactions often take the form of loans, lines of credit, letters of credit, financial guaranty insurance and standby bond purchase agreements.

We also help solve another recent challenge facing banking institutions—the increasing need to sell or participate out the risk assumed under any lending transaction. In our solution, the lender in the primary transaction retains its relationship with the borrower but is able to share or “participate out” the risks and the fees with one or more other participants. Frequently, our firm is engaged to represent our clients in both the primary lending transaction and in the accompanying participation. To facilitate the participation initially, we prepare standardized participation provisions which are incorporated into the transaction documents for each primary lending transaction. We are then able to use our knowledge of the underlying documents to negotiate the participation of those documents with other financial institutions. Because we are well known to many of the lenders and their counsel in this area, we have the advantage in efficiently and effectively completing the participations. We  also are sensitive to the needs of our clients' ongoing legal and business obligation to maintain relationships with their borrowers even if all of the liability has been participated to other institutions.