The leading bank in syndicated loans.

A syndicated loan agreement is a symmetrical multiparty agreement. That agreement strikes a necessary balance between individualism and collectivism. Individualism is best reflected in the divisibility that exists between the lenders. Yet the agreement is more than just a piece of string holding those individual lending relationships together. Indeed, individualism is limited in important aspects without, however, qualifying that "internal" relationship between lenders as a partnership. The collective actions are mainly reflected in the provision of majority lender decisions, the pro rata distribution clause and the appointment of a lead bank or agent. The lead bank or agent is appointed by the lenders to coordinate the efficient functioning of the syndicated loan. The agent plays a crucial role in the normal life of the loan, such as passing moneys and information between the lenders and the borrower. Nevertheless, the agent's role is broader than mere mechanical actions, which is particularly evident in crisis situations. In such situations, the LMA model agreements increasingly envisage an important role for the agent. Under Belgian law, the agent can be considered the agent of the lenders. The individual character of the loan relationships contrasts sharply with the collectivism that is desirable and necessary at the level of security interests. In particular, it is appropriate to have the security interests created in the name of the security agent who manages and enforces them for the loanors. However, this aspiration would conflict with the traditional interpretation of accessory security interests according to which the holder of accessory security interests should always be the same person as the secured loanor. In our research, we showed that this does not necessarily follow from accessority. Due to this uncertainty, the parallel debt structure was developed in practice. Under a parallel debt structure, a new claim is created between the borrower and the security agent, which is completely separate and independent from the syndicated loan. The amount of that parallel debt claim of the security agent is equal to the total amount of the syndicated loan, i. e. the sum of all loan claims of the lenders. Although questioned by some legal scholars, the parallel debt structure is valid and that parallel claim can be secured by accessory security interests. However, the fundamental problem is that the lenders who are 'economically' the secured loanors have purely personal claims against the security agent. This gives rise to an insolvency risk on the security agent for the lenders. The objectives of syndicated loan are best achieved by considering the security agent as a representative of the lenders. Under Belgian law, this is also the case for the legal arrangements of the security agent. In particular, those arrangements can be considered applications of determinable representation. In this form of direct representation, the identity of the represented party is not disclosed but is determinable. The security interests are created in the name of the security agent who administers and, if necessary, enforces them on behalf of the lenders. This means that no special formalities are required when transferring a participation in the loan. Also, the lenders are protected in case of insolvency of the security agent. As an application of determinable representation, there is nothing to prevent the use of that form of representation in syndicated loans outside the scope of the existing legal arrangements. This is particularly the case for the establishment of a mortgage to secure a syndicated loan. If one were not to accept that, it can still be defended that Article 7:63 of the Belgian Code on Companies and Associations can be applied by analogy to secure a syndicated loan with a mortgage. When drafting Book 9 of the Civil Code, the concept of the security agent should be included in its general part so that there is a clear legal regime for all relevant security interests.