Debt Sales 101 Mini-Series — Episode 5: Closing the Deal: Key Contracting and Transaction Issues

About this episode

This episode discusses key contracting and transaction issues in debt sales, focusing on risk allocation and regulatory compliance.

In Episode 5 of our Debt Sales 101 mini-series, we turn to contracting and closing, where legal structure, regulatory expectations, and commercial terms come together to define the transaction. We discuss the key provisions in a debt purchase and sale agreement and how those provisions allocate risk between buyers and sellers. From a regulatory perspective, the contract is more than a commercial document. It is also an artifact that regulators expect to review. We explain how representations and warranties, indemnification provisions, buyback mechanics, and audit rights are used to address regulatory risk, confirm the scope of assets being transferred, and establish expectations around compliance and oversight. These provisions are central to demonstrating that both parties have appropriately considered legal and regulatory requirements. We also discuss how contractual terms can directly impact pricing and execution. Restrictions on collection activity, credit reporting, or other post-sale actions can significantly affect the value of a portfolio. In addition, we cover key transaction mechanics such as data transfers, cutoff timing, and how contracts are introduced during the…

Topics covered

• debt sales
• contracting
• regulatory compliance
• risk allocation
• transaction mechanics

Keywords

• debt purchase agreement
• sale agreement
• regulatory risk
• indemnification
• audit rights
• pricing impact
• data transfers

Mentioned in this episode

Organizations: Ballard Spahr LLP

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