Remove waterfalls. Since lenders believe that the amounts due are applied in accordance with the current cascade as soon as they become insolvent, lenders can remove the application of the provisions for completion in their entirety. Yank the bank — a clause used in more complex financing agreements to get rid of the borrower, a bank in a group of lenders. This may apply if the rest of the union agrees to either additional funding or an amendment to the financing agreement and a lender can no longer provide financing or disagree. State property. As a general rule, the defaulting lender`s provisions provide that a lender cannot become a defaulting lender solely on the basis of the ownership of a private equity fund by a public authority (as long as that property does not grant the lender immunity from enforced enforcement action). A borrower may remove this language to prevent a creditor from being in possession of or related to a state institution – which may result, for example, from a state bailout of a lender. Any lender that already has a government affiliation should ensure that the language is retained or expanded to reflect its particular circumstances. But it turns out that there is poetry in all this legal darkness. There are «midnight clauses» and «insolvency stunts» that come down from an «insolvency pool» as a blessing for creditors (at least for the highest). We have urged our lawyers to expose some of their secret schemes that they resort to if, despite good intentions, things don`t go all around (we`re sure) not quite as expected. They explain what harmless phrases like «in good conscience after due demand» really mean.
We learn that the data room is a place that has no natural light, a place where no one really wants to land. We learn what «bank» means and what «Drop Dead Clause» means. Repayment and termination. Some credit facilities allow the borrower to repay arrears owed to a failing lender and to terminate the obligations of such a failing lender. A fee. While a lender remains a failing lender, it is no longer entitled to a commitment fee that would otherwise have been paid from the credit documentation. Replacing the defaulting lender. The main recourse a borrower has in its credit documentation to a failing lender is the ability to replace such a failing lender – the so-called «yank-a-bank» rules. These conditions give a borrower the right to compel a failing lender to assign its shares to a new replacement lender. Failing that, any replacement lender must be, in accordance with the credit documents, an eligible assignee, capable of taking over the loans and liabilities of the defaulting lender.