SECURED CROSS-BORDER FINANCING TRANSACTIONS

Trust and parallel debt

Cross-border financing transactions have links with different jurisdictions, and may include both civil law and Anglo-Saxon jurisdictions. Some jurisdictions do and some don’t accept that it is possible to grant security to a security agent (e.g. a special purpose vehicle or a trust) in order to secure money owed to several lenders (syndicated loan / facility).

As far as secured syndicated facilities are concerned, it is not uncommon that one or more lenders change. It is important that despite fluctuations in the group of lenders the security remains valid, without the need to re-establish (or re-register) …
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23
Feb 2014
CATEGORY

Finance

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CURACAO TRUST LEGISLATION

Entered into force on 1 January 2012

On January 1st 2012, new legalization entered into force pursuant to which it is now possible to set up a trust, similar to the trust in Anglo-Saxon common law jurisdictions, in Curacao. This trust is a legal exception to the paritas creditorum rule as we know it and serves as an important instrument which could be used for asset segregation purposes.

With the introduction of the Curacao Trust and the new paragraph 3 to section 231 of Book 3 of the Curacao Civil Code the need for a parallel debt construction in the …
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29
Feb 2012
CATEGORY

Finance

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PARALLEL DEBT IN CURACAO

New legislation

It has become market practice in Curacao, and also in the Netherlands, to create a separate (parallel) obligation, owed by the borrower (or guarantor) to the security agent in its own name, on the terms and in an amount equal to the original (principal) obligations owing by the borrower (or guarantor) to the lenders.

The security rights are then granted to the security agent in its own name to secure the parallel debt. This “parallel debt” structure is usually reflected in the facility agreement and gives the security agent an own and independent right to demand payment by …
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18
Feb 2012
CATEGORY

Finance

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STRUCTURING TRANSACTIONS IN THE DUTCH CARIBBEAN, THE SKY IS THE LIMIT

Example: Parallel debt structures under Dutch Caribbean law

In a parallel debt structure, a company (the borrower) acknowledges a debt to an appointed agent by promising to pay the agent an amount equal to the sum of the borrower’s obligations under the (syndicated) loan agreement with the lenders. Thus an independent, parallel debt is created between the borrower and the agent for which it is (further) agreed that this debt (not only becomes due and payable but also) will be considered paid and discharged at the same time and to the same extent as the underlying loans so that (of …
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07
Mar 2009
CATEGORY

Finance

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