Which parties in a loan syndication should perform due diligence with respect to the borrower or lenders at the time the loan is initially syndicated?
The lenders in a loan syndication (including participants and assignees in the primary syndication(15)) have the responsibility to conduct due diligence with regard to the borrower. The borrower may provide relevant information (e.g., organisational documents, annual reports) to the lenders through the arranger or agent, and the lender could use such documents for due diligence purposes (including customer identification) as appropriate. Identity may, however, be verified on a non-documentary basis, and lenders may obtain relevant information from other sources. The lenders do not have a due diligence obligation with respect to each other, nor does the arranger or agent have such an obligation with respect to the borrower solely by virtue of its capacity as arranger of, or agent under, the credit facility. However, the arranger or agent should have procedures to perform an appropriate level of due diligence with regard to lenders that it invites to join the syndicate. It is understood
Related Questions
- Which parties in a loan syndication should perform due diligence with respect to the borrower or lenders at the time the loan is initially syndicated?
- Should loan participants and assignees in the secondary market perform due diligence with respect to the borrower?
- Should the seller of the loan perform due diligence with respect to the participant or assignee and vice versa?
