Should loan buy-back offers be made to all lenders at the same time?

Lenders have traditionally been concerned about potential abuse of the equal treatment doctrine (i.e., where loan buy-back offers must be made to all lenders in the relevant tranche at the same time) and asserted that any debt reduction should take place via voluntary prepayment provisions only.

What is a buyback guarantee?

If you, as an investor, buy a loan where the borrower does not repay for more than 60 days, the loan originator is obligated to return your nominal capital and accrued interest. The buyback guarantee is a protection mechanism for retail investors and is also often referred to as a buyback obligation in the market of peer-to-peer lending.

Where do loan buy-backs come from?

Source of funds: Cash sources readily available to a borrower, such as other debt or operational cash flows, may be a (contractually) restricted source of funding loan buy-backs. Note that some credit agreements allow loan buy-backs on the open market if particular funding sources are used.