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Debt Transfer Agreement Template for Hong Kong

A Hong Kong law-governed agreement that facilitates the legal transfer of debt obligations from one party (the Transferor) to another party (the Transferee), while maintaining the original debtor's obligations. The document ensures compliance with Hong Kong's legal requirements, including the Contract and Rights of Third Parties Ordinance and relevant financial regulations. It details the terms of transfer, consideration, representations and warranties, and includes provisions for security interests, notices, and regulatory compliance where applicable. The agreement serves as a comprehensive framework for debt assignment, protecting the interests of all parties involved while ensuring legal enforceability under Hong Kong law.

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What is a Debt Transfer Agreement?

The Debt Transfer Agreement is a crucial legal instrument used in Hong Kong's financial and business landscape when one party wishes to transfer their rights as a creditor to another party. This document is particularly relevant in scenarios involving debt restructuring, portfolio sales, corporate reorganizations, or strategic debt management. It must comply with Hong Kong's legal framework, including the Contract and Rights of Third Parties Ordinance (Cap. 623) and other relevant financial regulations. The agreement typically includes detailed provisions about the debt being transferred, payment terms, warranties, and any associated security interests. It's commonly used by financial institutions, investment firms, and businesses engaged in debt trading or restructuring, requiring careful consideration of both legal and financial aspects to ensure proper transfer of rights and obligations.

What sections should be included in a Debt Transfer Agreement?

1. Parties: Identifies the Transferor (current debt holder), Transferee (new debt holder), and Debtor

2. Background: Describes the existing debt arrangement and the intention to transfer

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules

4. Transfer of Debt: Core provision detailing the transfer of rights and obligations

5. Consideration: Specifies the amount and payment terms for the debt transfer

6. Completion: Details the timing and mechanics of the transfer completion

7. Representations and Warranties: Standard warranties from all parties regarding capacity, authority, and debt status

8. Transferor's Continuing Obligations: Specifies any ongoing obligations of the original debt holder

9. Further Assurance: Obligation to execute further documents and take necessary actions

10. Notices: Process for serving notices under the agreement

11. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, etc.

What sections are optional to include in a Debt Transfer Agreement?

1. Security Transfer: Required if any security interests are being transferred with the debt

2. Conditions Precedent: Include if completion is subject to specific conditions being met

3. Tax Provisions: Required if specific tax arrangements or implications need to be addressed

4. Regulatory Compliance: Include if transfer requires specific regulatory approvals or compliance measures

5. Debtor's Consent: Required if debtor's express consent is necessary for the transfer

6. Partial Transfer Provisions: Include if only part of the debt is being transferred

7. Confidentiality: Include if specific confidentiality obligations are required beyond general provisions

What schedules should be included in a Debt Transfer Agreement?

1. Schedule 1 - Debt Details: Detailed description of the debt being transferred, including amount, interest rate, and payment terms

2. Schedule 2 - Existing Security: Details of any security interests associated with the debt

3. Schedule 3 - Completion Requirements: List of documents and actions required for completion

4. Schedule 4 - Form of Notice to Debtor: Template notice informing debtor of the transfer

5. Schedule 5 - Related Documents: List and copies of relevant underlying agreements and documents

6. Appendix A - Payment Schedule: Detailed schedule of any installment payments or payment arrangements

7. Appendix B - Required Consents: Copies of third-party consents required for the transfer

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Hong Kong

Publisher

Ƶ

Cost

Free to use

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