CHAPTER 11
Assignments and Participations
11.1 DISTINGUISHING ASSIGNMENTS AND PARTICIPATIONS
Credit agreements typically regulate both assignments and participations. Understanding the legal distinction between the two is important.
Assignments create direct contractual rights between the borrower and the assignee. In a typical assignment, the assignor transfers its rights and obligations (except to the extent explicitly retained) to the assignee. The bundle of transferred rights in a typical assignment include of course the right to payment but also any rights of enforcement. As a result, if the borrower defaults in payment of the loan, the assignee can sue the borrower directly and does not have to join in the suit with the assignor lender ...
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