What are the different forms of Debt Purchase Transactions?

Debt Purchase Transactions (DPT) under a facility agreement based on the loan Market Association (lma) form can broadly be divided into two main types:

1. • DPT between lenders under a facility ('Lenders') and other existing Lenders, affiliates of Lenders or third parties not affiliated with the members of a borrower group (Borrower Group)(Lender DPT); and
2. • DPT between Lenders and third parties affiliated with or the ultimate investors (Sponsor) in the Borrower Group (Borrower Group DPT).

In response to the actions of borrowers following the credit crunch of 2008 (before which DPT were generally not controlled by loan agreements), the LMA provides drafting for Borrower Group DPT based on three options:

1. • outright prohibition on all types of Borrower Group DPT
2. • prohibition on DPT by the Borrower and Borrower Group, but permitting DPT by the Sponsor or an affiliate of the Sponsor (Sponsor Affiliate)