REVIEW OF KEY LOAN AGREEMENT ISSUES
Conflict between representations, conditions precedent, undertakings and events of default
The pari passu clause
The negative pledge
The cross default clause
The material adverse change clause
Linking the loan to the borrower`s rating
“Material”, “reasonable” worth the debate?
Subjectivity and control in the context of events of default
Review clauses from a loan agreement and identify key issues for the borrower.
THE LOAN AGREEMENT IN DIFFERENT COMMERCIAL CONTEXTS
Comparison of provisions appropriate to corporate risk, project risk and/or asset risk
HOMEWORK PREPARATION FOR WORKSHOP TWO
Review comments from a borrower on a loan agreement and consider the bank`s response.
KEY LEGAL ISSUES PART 1: BASIC POINTS
- Types of claim and remedies
KEY LEGAL ISSUES PART 2: GOVERNING LAW AND JURISDICTION
- What courts have jurisdiction to deal with disputes in an international context? What law will they apply?
KEY LEGAL ISSUES PART 3: BANK/AGENT LIABILITIES RESPONSIBILITY FOR MISREPRESENTATIONS
- For the arranger
- For a bank selling a participation in the secondary market
- For the borrower
- For the lawyers
KEY LEGAL ISSUES PART 4: BANK/AGENT LIABILITIES OTHER RESPONSIBILITIES OF THE BANKS
- Agents and trustees
- Fiduciary duties
- Conflicts of interest
KEY LEGAL ISSUES PART 5: CLAWBACK/UNENFORCEABILITY
- “In what circumstances might obligations be avoided or become unenforceable?”
- Financial assistance
- Ultra vires
- Commercial benefit
- Transactions at an undervalue
- Interference with contracts
Participants will be given a scenario and asked to spot the legal issues.
Damages and debt – what are the differences?
Substitutes for guarantees e.g.
Commitments to inject capital
Put options, leases, offtake agreements and other contractual support
Security on bank accounts
Security, title financing and recharacterisation
Participants will review key terms of a contract which a bank is proposing to take as security and identify issues which need to be resolved.
We will review a number of different intercreditor agreements relevant to different circumstances.