What a Syndicated Loan Is
A syndicated loan is a large lending transaction in which several lenders — banks or other financial institutions — act simultaneously in relation to a single borrower. This structure allows the borrower to access an amount that would represent an excessively concentrated or risky exposure for any single creditor. The Georgian Civil Code regulates the loan agreement as a distinct contract type, and these general norms provide the legal foundation of a syndicated deal. The details of the multi-creditor structure — the participants' relationships, the function of the agent bank, the order of disbursements — are agreed by the parties on the basis of contractual freedom, while each lender's claim remains subject to the rules of the loan agreement.
The Loan Agreement Under the Civil Code
Article 623 of the Civil Code provides that under a loan agreement the lender transfers to the borrower money or other generic things into the borrower's ownership, and the borrower undertakes to return things of the same kind, quality and quantity. This formulation is decisive for syndicated loans as well: the money transferred by the group of lenders passes into the borrower's ownership, and the borrower assumes the obligation to return things of the same kind and quantity — money. The loan is a real contract: it is considered concluded from the moment of transfer of the thing, which in a syndicated deal corresponds to the transfer of each tranche. When preparing the transaction documents it is therefore important that the amount lent by each creditor and the corresponding repayment obligation be clearly reflected in the papers, because the statutory scheme attaches to what has actually been transferred.
When No Repayment Term Is Agreed
Article 626 governs the case where the repayment term is not defined in the contract: the debt must be returned upon termination of the contract by the creditor or the debtor, and the period for terminating the contract is three months. In practice this means that a loan left without a term is not an indefinite facility: either party may bring the contract to an end and demand repayment, observing the three-month period. This norm is particularly relevant in multi-tranche syndicated facilities — where the term of a particular tranche is not specified, the rule of Article 626 fills the gap. That is why each tranche's maturity and repayment schedule should be defined precisely in the draft loan documentation, rather than left to statutory default rules that may not match the commercial intent of the parties.