News & Resources

Publications & Media

LSTA Publishes New Model Credit Agreement Provisions with DQ Structure

Business Law Update Elizabeth A. Orelup

On August 8, 2014, the Loan Syndication and Trading Association (“LSTA”) published modifications to the Model Credit Agreement Provisions (“MCAPs”). The MCAPs now provide a structure for a borrower to identify “disqualified institutions” that are not eligible to become a lender under the Credit Agreement, by assignment or participation (“the DQ structure”). The MCAP revisions add standard provisions for loan buybacks by the borrower and affiliated lenders (such as private equity sponsors), refinancings and cashless rolls, and amend and extend transactions. The DQ structure also streamlines the process for trading in the secondary market, as more borrowers opt to create DQ lists for their credit facilities.

Considerations for Loan Documentation

The MCAPs are standardized provisions that protect the competing interests of lenders, borrowers, and sponsors as well as the secondary market in syndicated credit facilities. The MCAPs also provide a template for documentation in middle market credit transactions. Lenders should anticipate that a borrower or sponsor that is concerned about competitors or other “unfriendlies” gaining access to confidential information and leverage through the borrower’s senior capital structure, will want to include similar provisions in their credit facilities.

If you have any questions regarding these matters, please contact Liz Orelup at (414) 277-5159 / [email protected], Tim Moser at (602) 229-5262 / [email protected], or your Quarles & Brady attorney.

Payment Portal

You are leaving the Quarles & Brady website and being directed to the bill presentment and paying service offered by a third party provider. If you do not wish to continue to the site, click Close or use the Back button on your web browser to return the Quarles & Brady website.