Assignment of the right of claim under the credit agreement

Relationships in the field of lending, unfortunately, do not always go smoothly. Sometimes situations arise when it becomes unprofitable for the creditor or it is impossible to continue servicing the credit agreement. In this case, the question arises: how to transfer the debt to another person? The answer is simple – by ceding the right of claim.

What is assignment of the right of claim under a credit agreement?

This is a civil law mechanism that allows the creditor (assignor) to transfer all his rights and obligations under the credit agreement to another person (assignee). This means that the assignee becomes a new creditor, having the right to demand from the debtor the fulfillment of obligations under the contract.

In what cases is it relevant?

Assignment of the right of claim under a credit agreement can be relevant in many situations, both for creditors and for potential assignees (persons who receive the right to demand the fulfillment of the debtor’s obligations). Here are some of the more common cases:

For creditors:

1. Sale of problem debt. This can be beneficial for banks, collection companies, investment funds and even individuals who want to dispose of distressed assets, improve their financial statements or gain quick access to cash.
2. Debt restructuring. A partial debt discharge can help spread the debt burden among several creditors, which can be beneficial for a debtor who is experiencing financial difficulties.
3. Change of owner. In the event of a merger or acquisition of legal entities, rights and obligations under credit agreements may be transferred to the new owner by assignment.

For assignees:

1. Investments. A distressed debt assignment can be a profitable investment if the purchase price is significantly lower than the face value of the debt. The assignee can make a significant profit if he succeeds in collecting the debt from the debtor.
2. Improvement of liquidity. The assignee can purchase the debt for the purpose of its further sale to other investors or collection companies.
3. Strategic goals. Subrogation can be used to gain control over the debtor’s assets, such as company shares or real estate.

It is important to note that the assignment of the right of claim is not always a simple process.

There are certain legal nuances that must be taken into account to avoid problems in the future. Therefore, it is recommended to seek qualified legal assistance from lawyers who specialize in credit law. Experts of the company “Prykhodko and partners” will help you do everything correctly and quickly.

Peculiarities of the procedure for assigning the right of claim under a credit agreement

• Form of the contract: written with mandatory notarization.
• Debtor’s consent: not required, except for cases provided by contract or law.
• Notification of the debtor: the assignor is obliged to notify the debtor of the fact of assignment of the right of claim.
• Transfer of rights and obligations: from the moment of conclusion of the contract of assignment of the right of claim.

Assistance of a lawyer in case of ceding the right of claim under a credit agreement

The legal company “Prykhodko and Partners” offers comprehensive support at all stages of assigning the right of claim under the credit agreement.

Our experts will help you:

Assess the situation:

• Analyze the credit agreement and determine the possibility of its withdrawal.
• Help determine the market value of debt.
• Assess possible risks and legal nuances.

Prepare documents:

• Develop a draft contract of assignment of the right of claim, taking into account your interests.
• Collect the necessary documents, including: a credit agreement, a debt repayment schedule, documents confirming the fulfillment of obligations by the debtor, acts of acceptance and transfer of property (if it is the subject of a pledge).

Ensure legal security:

• Check the legal purity of credit documentation.
• Provide a notarized certificate of the contract of assignment of the right of claim.
• Notify the debtor of the fact of the assignment of the right of claim.
• To control the fulfillment of obligations by the debtor to the new creditor.

Represent your interests:

• Protect your rights and interests in case of disputes with the debtor or other parties.
• Represent your interests in court, if necessary.

Ensure confidentiality:

• To guarantee the confidentiality of all information received from you.

Advantages of cooperation with our company

• Experienced lawyers specializing in credit law.
• An individual approach to each client.
• Confidentiality and reliability.
• Affordable prices.

If you need advice or want to know the price of the assignment of the right of claim under the credit agreement, fill out the form below.