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Our Distressed Debt & Claims Trading Team discusses how the updates to the Loan Market Association’s Terms and Conditions incorporate European bail-in rules after Brexit.
In conjunction with Brexit becoming effective on January 1, 2021, the Loan Market Association (LMA) updated its Standard Terms and Conditions for Par and Distressed Trade Transactions (Bank Debt/Claims). LMA bank debt trades occurring on or after January 1, 2021 will now be explicitly subject to European bail-in legislation, which gives European regulators the power to modify liabilities owed by certain failing European financial institutions of the UK and Member States of the EU. These regulations include supranational rules, such as Article 55 of the European Union’s Directive 2014/59/EU, as well as national-level regulations of the UK, Iceland, Norway, and Liechtenstein. Broadly, Article 55 requires certain financial institutions of Member States