Loan Novation Agreement for Malta

Loan Novation Agreement Template for Malta

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Loan Novation Agreement

"I need a Loan Novation Agreement under Maltese law for the transfer of a €2.5M corporate loan from Bank of Valletta to HSBC Malta, scheduled for March 2025, with the original borrower being a local manufacturing company."

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What is a Loan Novation Agreement?

The Loan Novation Agreement under Maltese law is essential when parties wish to substitute one lender with another in an existing loan arrangement. This document is commonly used in debt restructuring, portfolio transfers, or when refinancing existing debt obligations. It must comply with the Maltese Civil Code's requirements for novation, particularly regarding the extinction of the original obligation and creation of a new one. The agreement typically includes provisions for transferring or preserving security interests, as Maltese law automatically extinguishes securities upon novation unless explicitly maintained. It's particularly relevant in Malta's robust financial services sector and is often used in cross-border transactions where Maltese law governs the lending relationship. The document needs to address specific Maltese legal requirements while ensuring practical commercial outcomes for all parties involved.

What sections should be included in a Loan Novation Agreement?

1. Parties: Identifies all parties: Original Lender, New Lender, and Borrower, including full legal names and registered addresses

2. Background: Recitals explaining the existing loan agreement, the parties' intention to novate, and the purpose of the novation

3. Definitions and Interpretation: Defines key terms used in the agreement and sets out interpretation rules, including references to the Original Loan Agreement

4. Novation: Core clause effecting the novation, specifying the discharge of original obligations and creation of new obligations

5. Effective Date: Specifies when the novation takes effect and any timing considerations

6. New Lender's Undertakings: Commitments and warranties given by the new lender regarding the assumed obligations

7. Borrower's Acknowledgment and Consent: Borrower's formal acceptance of the novation and confirmation of continuing obligations

8. Security Preservation: Provisions maintaining or reinstating security interests under the new arrangement

9. Representations and Warranties: Standard representations from all parties regarding capacity, authority, and enforceability

10. Costs and Expenses: Allocation of costs related to the novation process

11. Notices: Communication procedures and contact details for all parties

12. Governing Law and Jurisdiction: Confirms Maltese law as governing law and jurisdiction for disputes

What sections are optional to include in a Loan Novation Agreement?

1. Conditions Precedent: Used when the novation is conditional upon certain events or document deliveries

2. Regulatory Compliance: Required when the novation involves regulated entities or activities under Maltese financial services law

3. Tax Provisions: Include when there are specific tax implications or arrangements between the parties

4. Language: Required when parties wish to specify the prevailing language version (English or Maltese)

5. Original Lender Release: Detailed release provisions when the original lender requires specific discharge terms

6. Interest and Fees Apportionment: Used when there are complex arrangements for handling accrued interest or fees

7. Partial Novation Provisions: Required when only part of the loan is being novated

8. Confidentiality: Include when parties require specific confidentiality obligations beyond standard practice

What schedules should be included in a Loan Novation Agreement?

1. Original Loan Agreement: Copy or details of the loan agreement being novated

2. Outstanding Amount Schedule: Details of the outstanding loan amount, interest, and any other sums as of the novation date

3. Security Documents: List and copies of all security documents to be preserved or reinstated

4. Conditions Precedent Documents: List of required documents and conditions to be satisfied before novation becomes effective

5. Form of Notice to Third Parties: Template notices to inform relevant third parties of the novation

6. Payment Instructions: New payment and banking details for loan servicing

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

Financial Services

Banking

Investment Services

Real Estate

Corporate Services

Maritime

Gaming

Healthcare

Hospitality

Manufacturing

Technology

Relevant Teams

Legal

Finance

Treasury

Credit

Compliance

Risk Management

Corporate Secretariat

Banking Operations

Portfolio Management

Debt Recovery

Transaction Management

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Finance Manager

Treasury Manager

Credit Manager

Loan Officer

Compliance Officer

Risk Manager

Corporate Secretary

Financial Controller

Banking Relationship Manager

Debt Restructuring Specialist

Portfolio 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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