The second decision handed down from the new U.K. Financial List addresses how failing to fully understand LMA standard form documentation can be disastrous for hedge fund managers. In 2013, certain funds purchased a surety bond position under a 2007 credit facility. That trade was subject to the Loan Market Association’s (LMA) 2012 Standard Terms and Conditions for Par and Distressed Trade Transactions (Bank Debt/Claims). However, the trade failed to settle because the parties disagreed as to whether the funds had purchased only the right to receive payment from the borrower or whether the funds were also obligated to pay claims to the surety bondholders. The U.K. High Court of Justice (Commercial Court) recently ruled on the trade. This article summarizes the underlying facts and the Court’s analysis. For a recent decision involving other LMA standard terms, see “U.K. Supreme Court Resolves Ambiguity in Standard LMA Terms for Sales of Loan Participations” (Apr. 2, 2015). For more on loan transactions governed by LMA standard terms, see “Should Hedge Funds Include Automatic Termination As a Term of Bank Debt Trades on the New Loan Market Association Forms?” (Mar. 11, 2010); and our two-part series on hedge funds’ trade risk in European secondary loans: Part One (Oct. 21, 2011); and Part Two (Oct. 27, 2011).