Special legal services for the loan review stage of the Margaret Island Container Terminal Project in Colon, Panama

The China Development Bank Tianjin Branch intended to provide the export buyer’s credit loans for the Panama Colon Terminal Company. Hylands Law Firm, together with Panama Morgan & Morgan Law Firm, acted as the special legal advisers for this project and provided special legal services for the bank at the loan review stage. This project involved foreign-related legal affairs with a large amount and great influence since the establishment of diplomatic relations between China and the Republic of Panama, which played an important role in promoting Chinese enterprises ‘going global’.

The services provided for the project mainly included legal due diligence, legal risk judgment and prevention suggestions; providing an examination of the entity qualification and legal status of the borrower and guarantor in the jurisdiction of registration; examining the legality of loan use and repayment sources and providing legal advice; providing legal advice on the impact of taxation, dispute resolution, legal options, etc. on loans; coordinating Panamanian attorneys to issue legal opinions; examining the legal risks associated with the project and proposing implementation measures based on the specific circumstances of the project; reviewing and translating the opinions of Panamanian attorneys and completing the Summary of Legal Opinions of External Attorneys for Loan Review of International Credit Projects following the standard legal due diligence checklist template and the legal due diligence results of overseas attorneys.

Since the transaction structure of the project was complicated, the legal teams creatively suggested that the bank should set credit enhancement measures for the loan by way of guaranteeing trust according to the local commercial practice in Panama. The bank should entrust a trusted company to manage the trust assets on behalf of the bank, and classify the property interests such as a land mortgage, accounts receivable, equity pledge, insurance interest, and mortgage on movables into trust and the bank should be the beneficiary under the trust, thus fully protecting the bank’s loan interests.