Electronic Settlement Revolution: How ClearPar Slashed Distressed Loan Closing Time to 10 Days

The distressed leveraged loan market just witnessed a significant breakthrough. What once took two months to settle can now close in just 10 days—thanks to ClearPar’s newly introduced electronic trade settlement system. Deutsche Bank’s recent transaction marked the first successful deployment of this innovation, signaling a watershed moment for an industry long burdened by manual processes.

The Efficiency Gap That Needed Closing

For years, distressed loan settlements operated at a glacial pace. The 2018 data painted a stark picture: while par and near-par loans settled in approximately 16 days, distressed loans languished at 67 days—more than four times longer. The culprit? A labyrinth of manual work. Buyers and sellers had to wade through exhaustive legal due diligence, produce mountains of documentation, and coordinate closing procedures entirely by hand.

This inefficiency came at a cost. Every extended settlement cycle tied up capital, increased operational strain, and created friction in an already complex market segment.

Automation Meets Complexity

ClearPar’s distressed loan solution attacks this problem directly through electronic workflows. The platform automates upstream ownership reviews, inventory management, and purchase and sale agreement creation—the three pain points that historically consumed the most time.

The technology catalogs complete upstream history and documentation lineage for each transaction. Rather than manually drafting Purchase and Sale Agreements (PSA) to LSTA standards, the system generates these documents automatically as data-driven outputs. Every chain of title, every ownership transfer, every allocation gets tracked and transparently recorded within the platform.

As Mike Kerrigan from Hunton Andrews Kurth explained, this eliminates the labor-intensive back-and-forth where sellers describe multiple chains of ownership to buyers, then buyers must manually verify each link. ClearPar does all this electronically, freeing teams for higher-value activities.

A Proven Track Record of Market Transformation

ClearPar didn’t arrive overnight. Since pioneering electronic loan trade settlement in 2001, the platform has systematically automated matching, fund allocation, assignment agreement generation, borrower consent processes, and payment instructions. The results speak for themselves: through the first three quarters of 2019 alone, ClearPar settled approximately $634.5 billion in par trades across the LSTA secondary market, representing 750,000 fund allocations and connecting nearly 1,000 market participants.

Now, extending this proven infrastructure to the distressed segment represents a natural expansion—one with immediate practical benefits.

What This Means for Credit Markets

Deutsche Bank’s successful 10-day close demonstrates that speed and efficiency are achievable at scale. As Shawn Faurot noted, this positioning matters especially when credit conditions tighten. The ability to operate nimbly through electronic settlement could prove decisive during market stress, when agility separates winners from those caught flatfooted.

The distressed market is already seeing renewed activity, making this timing crucial. ClearPar’s automation doesn’t just reduce friction—it enables market participants to respond swiftly to opportunities, manage risk more effectively, and keep capital flowing through a critical corner of the credit markets.