Secured Transactions

The Central Bank Case: Trusting in True Sales of Participations

, New York Law Journal

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In her Secured Transactions column, Barbara M. Goodstein writes: When do loan participation agreements transfer the actual property rights of the originating creditor versus merely a contractual right against the counterparty to proceeds of that property? That question was the subject of a decision earlier this year. Though not groundbreaking, the case provides a thoughtful discussion on this subject, an interesting emphasis on "trust" language, and an opportunity to re-visit current thinking of courts on the issue of when participations are true sales of loan interests.

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