Liability of buyer of loan to account to seller for any part of payment premium paid by borrower that is attributable to period before completion of sale

In TAEL One Partners Ltd (as general partner of the Asian Entrepreneur Legacy One LP) v Morgan Stanley & Co International plc [2013] EWCA Civ 473, the Court of Appeal held that, on the true construction of the Standard Terms and Conditions for Par Trade Transactions of the Loan Market Association (the LMA Terms), the seller of a loan could not recover from the buyer that part of the payment premium paid by the borrower which was attributable to the period before completion of the sale.

By a facility agreement originally dated 16 April 2009 (the Facility Agreement), the claimant agreed to participate, together with a number of other lenders, in the advance of a $100m syndicated loan to a borrower. The loan facility provided for a ‘Payment Premium’ to be paid by the borrower at the same time as repayment of the capital of the loan, which enhanced the rate of return to the lenders…

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