Long-awaited documentation released by the Loan Market Association (LMA) has succeeded in filling some of the gaps that emerged when Lehman Brothers and several Icelandic banks collapsed.
But lawyers drafting new agreements should not assume that the new provisions are appropriate to every deal, particularly when it come to treating lenders equally. "It's not a simple case of plug in the words and off you go," said Susan Whitehead, a senior consultant in Lovells' banking group.
“One example is would it really be appropriate to include an automatic term-out clause when that can result in the lenders no longer being treated equally with drawings on a pro-rata basis?”The automatic-turnout clause allows an insolvent lender’s revolving credit...