What remedies should lenders, borrowers and opportunistic credit investors prescribe in light of current market practice and documentation?
This article examines some of the current issues arising in leverage finance agreements on defaults and the expansion of express remedy terms that can impact on debt transfers.
Key Points
- Increased probability of default rates rising in European leverage financings should cause astute borrowers and lenders to re-assess very carefully exactly what specific defaults/events of default might be curable, when and how, in light of current market documentation and practice.
- Can lessons learned in recent US loan default cases be instructive to European credit investors, given the increased availability of cross-class cram-down restructurings in Europe?
- Can lenders who have suffered loss/harm pursue action for ostensibly cured defaults?
- Timing can be key when lenders seek to effect contractually compliant credit transfers.
This article first appeared in the July/August issue of Butterworths Journal of International Banking and Financial Law.