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Loan transfers

Some lenders are interested in purchasing claims for a discounted price, enforce the distressed debts and so assume the risk that the debt will not be recovered. On the other hand, a debtor may receive a more favourable debt financing proposal and find it attractive to restructure the credit. We help our clients with this type of transactions. In particular, we assist our clients in: 

Knowledge & Insights


By reason of the Lithuanian law, the existing creditor shall have a right to assign a loan or its portion to the new creditor provided such assignment does not contradict to the mandatory laws of the Republic of Lithuania, or the agreement or such obligation is not related with the creditor’s person. The Lithuanian civil laws permit to assign both the existing and the future claim to third parties. However, a mandatory notice to the debtor (obligor) is required to validate the assignement. The assignment without an obligor’s consent will not be effective if the personality of a creditor is of the essence for the obligor.

If the loan is secured, one should check whether the security or guarantee can be assigned to the new creditor as well. Assignment of the security normally requires the consent of a debtor. 

It is, however, advisable for borrowers to include a clause that the new creditor would be excluded of the benefit of any tax grossing-up clauses (if such clause is included) and otherwise the liabilities of the borrower would not be increased as a result of the assignment. 


The existing lender and the borrower many agree to novate the whole or a portion of the loan agreement to the new creditor. As a result of the novation, the existing obligation expires if parties instead of an existing obligation create a new obligation replacing the primary obligation, which has a different subject matter or a different method of performance. The novation is also deemed the replacement of the existing debtor with a new one, or the replacement of the existing creditor by a new one, and the obligor is released from the duty to perform the outstanding obligations to the original creditor.

By reason of Lithuanian law, purpose of the novation is to ensure a complete substitution of a lender (creditor) rather than assignment of creditor's rights under the old agreement. After a novation agreement becomes effective, the old creditor is released from its obligations. In case of assignment, the obligor’s notification is sufficient, whilst in case of novation the obligor’s consent is necessary to validate the novation. 

Šulija Partners Law Firm Vilnius, registered office Jogailos street 11, Vilnius, LT-01116, Lithuania, fax +370 52051926, e-mail:

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