In this scenario, it is unlikely that the delivery of these monthly financial statements will in itself constitute a delay (and therefore also unlikely that the borrower will be required to inform the agent of the occurrence of a delay or default event, see below). This view is based on a legal analysis of the typical definition of “defect” and the fact that this definition does not include (as is sometimes the case) or refer to events that would become default events “over time”. Of course, a company would be free to choose to inform lenders in any case, and/or lenders could (wrongly from a purely legal point of view) consider the delivery of this financial data as a cause of “default”. Of course, if the relevant certificate of compliance that ultimately accompanies the underlying financial statement shows a breach of all or some of the financial commitments, this will result in an event of default on the day the commitments are tested. The crucial point here is to be very clear about what the definition of “defect” says when analyzing whether events or circumstances that can inexorably lead to a default default event necessarily represent a defect. Amend the “Reference Bank” portion of the LIBOR definition so that LIBOR is the average of the interest rates at which reference banks indicate that they can raise funds in the interbank market at the relevant time. In the equivalent definition, investment grade agreements always refer to the interest rates that reference banks “quote”. to offer deposits” and not for their actual cost of money. The [basic] reference rate in the LF agreement (which is included in the LIBOR definition) is an average real cost rate of the borrowing rate. This is in accordance with the calculation of the LIBOR screen RATE. Other events may be included in change of control definitions, such as reorganizations, consolidations, or other transactions where one of the following conditions occurs: In addition to significant adverse effects, the concepts of defect and default event are also critical. Generally, a delay is an event or circumstance that would be a default event “upon the expiration of a grace period, notification, decision under financial documents, or a combination of the foregoing.” As noted in the above definition of material adverse effects, it is the occurrence of defaults and default events that triggers certain important rights and remedies for lenders under the underlying financial documentation – including demand for underlying debt upon demand, immediate maturity, and payment of all or part of the debt, or taking measures to enforce Safety. Even if lenders choose not to exercise any of these rights after a default or default event, the fact that they can do so is likely to support their position toward the borrower in question, and there may also be other consequences for that borrower (some of which we will explore in detail below).
When analyzing credit documentation from the perspective of a pre-provisioned or non-performing loan, it is important to understand the scope of the definition of material adverse effects and the application of the definitions of “default” or “default event.” Indeed, the formulation of these seemingly harmlessly defined terms can have a decisive impact on the ability of a distressed or pre-provided borrower to continue to use its credit facilities and/or avoid having to disclose potential financial difficulties to its lenders in advance. Add definitions for “significant adverse effects” and in the “Change of control” clause for “Control” and “Joint Action”. The definitions of investment grade agreements are empty. Definitions of these terms in the LF agreement (which are not new) may not always be appropriate and often need to be simplified when used outside of leveraged financing. However, they are a reasonable starting point. In a stressed or struggling scenario, it is also useful for a company to keep an eye on the transfer conditions contained in the financial documents. Typically, when lenders are subject to restrictions on portability – for example to affiliates and white/licensed companies – these are eliminated after a persistent default event. Essentially, this means that after a default event, lenders would have the option to transfer to distressed investors and/or so-called “vultures” or other credit funds (provided, of course, that these companies are not already whitelisted). Therefore, the appearance and disposition of the relevant lender group vis-à-vis the underlying credit group could change quite dramatically after a default event occurs in circumstances where one or more of the existing lenders have decided to exit the loan and sell to investors who are “ready to own” or “in difficulty to control”, whose approach and motivations may vary. However, given the recent aggressive and promoter-focused literature, some borrowers may conclude that transfers to “ready-to-own” lenders are in fact prohibited or that consent to negotiation is still required in the event of default (except in cases of non-payment or insolvency of insolvency events). The above transactions are generally covered by inter-company agreements by change of control provisions.
However, there are other events that can trigger a change of control that you want to protect yourself from as a party to an agreement. .