Partial participation may be funded or unfunded. If it is not funded, it is called “partial risk participation.” There will of course have been a number of reasons why a purchase was originally structured as a partial shareholding. These reasons need to be reconsidered in the context of a subsequent investigation. These issues include: in cases where it is either disadvantageous or impractical for the sub-participant to become a lender, it may be possible (i) to submit the increase in partial participation to the third party and (ii) to enter into a new sub-participation agreement with the third party. The consequence of such a scheme would be that the economic benefit of the loan would be transferred without any of the above disadvantages being borne. It is clear that the need to negotiate the terms of such an agreement with a third party may delay a quick resolution, but such a transfer would effectively reduce the credit risk of the original donor (although the sub-participant is exposed to the same risk of insolvency compared to the new donor). iv) Tax – Depending on the borrower`s and sub-participant`s tax residence, an increase, if the sub-participant becomes a direct lender, may result in unfavourable tax treatment of interest collected under the credit contract, including withholding, etc. Some credit contracts offer a gross amount for such a deduction, but often the gross amount is limited. Nevertheless, the risk of fiscal inefficiency in the face of potential credit and performance risk will be eliminated if Grantor does not comply with its payment obligations under the partial participation agreement, which may be further enhanced by the lender`s insolvency. (i) Eligible lender – the credit contract may include contractual restrictions for eligible lenders. These restrictions are often linked to tax definitions and many buy-side funds have difficulty participating directly in a loan. In summary, if the beneficiary has not yet been the subject of a formal insolvency procedure in the United Kingdom (management or liquidation), the ability of the funder to carry out formal transactions is not limited.