It has long been considered that lenders under a syndicated facility retain a right to seek to recover their portion of a loan directly following a payment default, typically by seeking the winding up of obligors. This is based on the several nature of the rights of finance parties which appears in clause 2 of the standard LMA terms.

However, a recent first instance decision of the Hong Kong court in Charmway Hong Kong Investment Limited and others v Fortunesea (Cayman) Ltd and others (unreported) found that a syndicated facility based on LMA standard terms creates an aggregate loan, rather than individual loans due to the lenders.  Continue reading