What is a cross defaulting clause?
A cross-default provision makes an event of default under one loan by a lender, or its affiliate (“Lender Parties”), to a borrower, guarantor, or their respective affiliates (“Borrower Parties”), an event of default under another loan by a Lender Party to a Borrower Party.
What is cross acceleration in an ISDA?
Related Content. A clause which operates by defaulting a borrower under Agreement A when it defaulted under Agreement B and the lender under Agreement B accelerates repayment. A cross-acceleration provision effectively gives the lender under Agreement A the benefit of the default provisions in Agreement B.
What is a cross-default threshold?
A cross default threshold is the minimum loan amount that can be subject to CD. With this clause, loan amounts below the cross default threshold will not trigger a loan’s cross default provisions.
What happens in an event of default?
Events of default are common in loan agreements or debt instruments, the happening of which entitles the lender to cancel the facility and/or declare all amounts owing by the borrower to be immediately due and payable or payable on demand.
What is a default clause?
A default clause is a provision in a legal contract that states what will happen if either party in a contract defaults or fails to hold up their end of the agreement.
Is cross-default better than cross acceleration?
Generally if you are a corporate you want to slow things down; if you are a bank you want to speed them up. Banks prefer Cross Default normally; corporates prefer cross acceleration.
What is specified indebtedness?
“Specified Indebtedness” shall mean any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) (a) in respect of borrowed money and (b) any amount due and payable in respect of any Specified Transaction (except that, for this purpose only, the words “and the other party to …
What is ISDA 2002 Master Agreement?
The ISDA Master Agreement is a standard contract published by the International Swaps and Derivatives Association (“ISDA”). This contract governs all over-the-counter “OTC” derivatives transactions, cleared or uncleared, entered into between counterparties.
What is a specified transaction under the ISDA?
Specified Transactions are those financial markets transactions between you and your counterparty other than those under the present ISDA Master Agreement, default under which justifies the wronged party closing out the present ISDA.