Restructuring

Overview
This case is an unusual example of an LMA “standard” debt trade leading to litigation in the UK Supreme Court and demonstrates that standardised terms are by no means immune to dispute, despite their frequent use. It is also an interesting example of the judiciary taking into account the practical implications in the specific commercial context of the debt trading market, in addition to a legal consideration of the LMA standard wording, when reaching its decision.
The Supreme Court has held that the Loan Market Association standard terms and conditions for par trade transactions (the “LMA Terms“) do not allow a transferor to recover from the transferee part of a “Payment Premium” pertaining to the period prior to the date of transfer.
The Court will not readily infer continuing rights and obligations in the context of the LMA loan market, where standardised documentation has been designed to facilitate the trading of debt, often many times over.
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