Debt Assumption Agreement for Malta

Debt Assumption Agreement Template for Malta

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Debt Assumption Agreement

"Need a Debt Assumption Agreement under Maltese law where our subsidiary company (TechStart Ltd) will take over a €2.5M bank loan from our parent company (GlobalTech Solutions plc), with the transfer to be completed by March 2025 and maintaining existing security arrangements."

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What is a Debt Assumption Agreement?

The Debt Assumption Agreement is a crucial document used in various business contexts under Maltese law, particularly in corporate restructuring, mergers and acquisitions, or group company reorganizations. It enables one party to take over the debt obligations of another, with the creditor's explicit consent. The agreement must comply with the Maltese Civil Code provisions regarding debt transfer and novation, ensuring all parties' rights are protected. This document typically includes detailed information about the original debt, payment terms, security arrangements (if any), and conditions precedent. It's particularly important in scenarios where businesses need to reorganize their debt obligations or when a stronger entity wishes to assume the debts of a weaker one. The agreement can be structured either to fully release the original debtor or to maintain their liability alongside the assuming party, depending on the commercial arrangement and creditor requirements.

What sections should be included in a Debt Assumption Agreement?

1. Parties: Identification of all parties: Original Debtor, Assuming Party, and Creditor, including full legal names and registration details

2. Background: Context of the original debt, relationship between parties, and reasons for the debt assumption

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Debt Assumption: Core provisions detailing the assumption of debt, including amount, terms, and effective date

5. Original Debtor's Obligations: Specifications of the original debtor's continuing obligations or release

6. Assuming Party's Obligations: Detailed obligations of the assuming party, including payment terms and conditions

7. Creditor's Rights and Consents: Rights of the creditor and their consent to the assumption arrangement

8. Representations and Warranties: Standard and specific representations and warranties from all parties

9. Conditions Precedent: Conditions that must be satisfied before the agreement becomes effective

10. Notices: Procedures and requirements for formal communications between parties

11. Governing Law and Jurisdiction: Specification of Maltese law as governing law and jurisdiction for disputes

12. Execution: Signature blocks and execution formalities

What sections are optional to include in a Debt Assumption Agreement?

1. Security Arrangements: Include when existing security needs to be transferred or new security is being created

2. Regulatory Compliance: Include when the transaction involves regulated entities or requires regulatory approvals

3. Tax Provisions: Include when specific tax implications need to be addressed

4. Release of Original Debtor: Include when original debtor is to be fully released from obligations

5. Step-in Rights: Include when creditor requires right to step in under specific circumstances

6. Further Assurance: Include when additional documentation or actions may be required post-completion

7. Assignment and Transfer: Include when parties need specific rights to assign or transfer their rights/obligations

What schedules should be included in a Debt Assumption Agreement?

1. Schedule 1 - Details of the Original Debt: Detailed description of the debt being assumed, including amount, interest rate, and payment terms

2. Schedule 2 - Existing Security: Details of any existing security arrangements related to the debt

3. Schedule 3 - Conditions Precedent Documents: List of required documents and conditions to be satisfied

4. Schedule 4 - Form of Notice to Creditor: Template for formal notice of assumption to creditor

5. Schedule 5 - Corporate Approvals: Copies or forms of required corporate authorizations

6. Appendix A - Payment Schedule: Detailed schedule of payments to be made under the assumed debt

7. Appendix B - Completion Checklist: List of actions and documents required for completion

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Relevant Industries

Banking and Financial Services

Real Estate

Construction

Manufacturing

Retail

Healthcare

Energy

Infrastructure

Technology

Telecommunications

Professional Services

Transportation and Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretarial

Credit Control

Corporate Development

Mergers & Acquisitions

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Financial Controller

Treasury Manager

Risk Manager

Company Secretary

Compliance Officer

Business Development Director

Restructuring Officer

Credit Manager

Investment Manager

Corporate Finance Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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