Material adverse change: Difference between revisions
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imported>Doug Williamson (Amend to align with ACT Corporate Finance & Funding reading 4.3.1 p13 Documentation 1 April 2014. Categorise the page. Link with new Material adverse effect page.) |
imported>Doug Williamson (Amend to adopt more detail from ACT CFF reading 4.3.1 p13 Documentation 1 April 2014.) |
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Normally it is intended as a 'catch-all' clause and states that if ''in the opinion of the lender'' there is a change in the circumstances of the borrower that is both material and adverse, then this will constitute an event of default. | Normally it is intended as a 'catch-all' clause and states that if ''in the opinion of the lender'' there is a change in the circumstances of the borrower that is both material and adverse, then this will constitute an event of default. | ||
Not surprisingly this is a contentious clause, depending on who | |||
Not surprisingly this is a contentious clause, depending on who determines 'material', and how. | |||
Modified forms of the clause may require the opinion to be 'reasonable' or replace the 'opinion' with an objective test. | |||
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* [[Material adverse effect]] | * [[Material adverse effect]] | ||
[[Category: | [[Category:Long_term_funding]] | ||
[[Category: | [[Category:Long_term_funding]] | ||
[[Category: | [[Category:Treasury_operations_infrastructure]] | ||
Revision as of 17:27, 13 June 2014
(MAC).
A clause in a loan agreement.
Normally it is intended as a 'catch-all' clause and states that if in the opinion of the lender there is a change in the circumstances of the borrower that is both material and adverse, then this will constitute an event of default.
Not surprisingly this is a contentious clause, depending on who determines 'material', and how.
Modified forms of the clause may require the opinion to be 'reasonable' or replace the 'opinion' with an objective test.
