BKD recently announced that some third parties in bank credit documents have revised their standard credit ownership contracts. These changes may result in these agreements not being in compliance with accounting rules that allow the seller to account for the transfer as a loan sale. Although they can still be considered genuine sales for legal purposes, the accounting rules differ in some respects from the legal definition of a genuine sale. B, for example, if the buyer does not have the right to sell or sell his stake. Participation agreements generally contain a clear statement of the intention of the original bank and the participating bank to consider the interest as an assignment of the interest on loans related to holdings (and also to provide that the right of the original bank to participate in the loan be passed on to the participating bank and that nothing in the participation agreement is interpreted as the creation of a relationship between the debtors and the creditors between the bank and the participating bank). Participation agreements often contain a provision that, if a change in generally accepted accounting principles that come into effect after the date of the participation agreement would result in the transaction being treated as a transaction other than the purchase and sale of a stake in the loan, the parties agree to negotiate in good faith any necessary changes to the participation agreement or any modification of the transaction in order to preserve the original intent of the parties. to preserve the parties` original intent. which must proceed with the purchase and sale of a shareholding in the loan. While these provisions may be useful in justifying a change in the participation agreement, they will not, as a general rule, over the accounting or agency positions that the existence of an optional provision or a limitation of the transfer in the participation agreement negates the “true sale treatment” of the participation. Another problem, often mentioned during the recession, was the ownership of locked or surrendered collateral, which led lead banks and participating banks to ask how these guarantees should be borne by banks after liquidation or rebate, since the “loan” no longer exists.