For more information on the Cannais provisions of facilitated contracts, visit the Loan Markets Association or the Association of Corporate Treasure. Loan contracts may include provisions that allow borrowers to refinance or restructure the loan – to benefit, for example, from lower interest rates or to extend the repayment period. If the lender refuses a refinancing or restructuring that should be authorized by the agreement, it is a breach of contract. An infringement may occur even if the lender does not sufficiently disclose changes in credit conditions, even if such changes are authorized by contract. An example would be the change in the interest rate of a variable rate loan. The lender may have the right to raise the interest rate, but the contract generally requires that the lender notify the borrower before it does so. Advances: A borrower should ensure that he or she has some flexibility to pay advances (early repayment of the loan) without paying any additional fees if possible. However, advances are only allowed at the end of interest periods, which avoids the payment of breakage fees and, in most cases, is in the best interests of the borrower. Particular attention should be paid to all mandatory advances (for example. B in the event of a sale or, for private companies, on a float) as well as at any down payment costs to be paid.
In addition to the violation of the payment clause and the violation of the financial agreement, a more general delay event is often introduced to stop any violation of all other obligations of the borrower under the loan agreement, such as. B offences committed against companies. The borrower may attempt to limit the delay event to “substantial” offences and/or negotiate an additional period in which the infringement can be corrected before the delay occurs. It is therefore important that the borrower carefully refrain from all obligations under the loan agreement, including any restrictions on the borrower`s ability to manage the property (. B for example, leasing, divestment and development) and borrowing from third parties. The various representations, guarantees and obligations must therefore be modified to ensure that they do not interfere with the borrower`s activities or hinder his intentions for the property. Borrowers: The definition of the borrower includes all group companies that require access to the loan, including revolving credits (flexible credits as opposed to a fixed amount repaid in increments) or the working capital component. This should also include all target companies acquired with the funds made available. Subsidiaries that need a provision may need to join the group of borrowers. If there is a reason why the affected companies cannot be parties to the agreement when they are executed – for example.
B in the event of an acquisition by limited companies – prior approval from the bank would be required for them to be included in the agreement at a later date. If there are foreign companies in the group, it is worth asking whether they will have access to credit facilities or how. The facility agreement may also designate an individual borrower and allow that borrower to continue lending to other members of his or her group of companies. The filing of a fraudulent and lender action usually begins when the borrower acknowledges some kind of unfair or fraudulent conduct on the part of the lender. It is not always as simple as it sounds, as lenders are traditionally seen as the entity that controls the credit situation. Like lenders, however, borrowers have certain rights in a loan agreement that are protected by law.