LMA project tackles insolvency

The Loan Market Association (LMA) has set up a project via its insolvency working party, to produce documentation to help players in the syndications market gain a greater understanding of the restructuring process.

The project will initially focus on producing a letter governing the appointment by the company of a co-coordinator and co-ordinating committee, and a letter from the two new parties to the relevant lenders.

Originally established in August 2007, the LMA insolvency working party aims to examine issues relating to insolvency and how they effect the syndicated loan market.

With new types of lenders entering the market, as well as the growth in the size of syndicates, future restructuring will potentially become increasingly complex.

David Slade, LMA chairman and head of the European syndicated loans group at Credit Suisse, comments: "Difficult market conditions have focused arrangers' and lenders' minds on how the market would react to a round of major corporate failures.  The LMA insolvency group has been established to help practitioners prepare for this eventuality, as well as to keep insolvency legislation under review."