Contingent covenant and Living will: Difference between pages

Revision as of 15:44, 28 March 2013

1. A contingency plan of how a financial institution could be wound up in the event of a collapse.

A requirement of the US Dodd-Frank financial reform law for financial institutions with more than $250 billion in assets.

2. More generally, a set of instructions which specifies what actions are to be taken if a person is unable to do so due to illness or incapacity.

Also known as an advance decision.

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-''Loan documentation.''
+. A contingency plan of how a financial institution could be wound up in the event of a collapse.
-A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure.
+A requirement of the US Dodd-Frank financial reform law for financial institutions with more than $250 billion in assets.
-A common example is a contingent covenant linked with the borrower's credit rating.
-The existence of such covenants is a very significant source of risk for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating.
+. More generally, a set of instructions which specifies what actions are to be taken if a person is unable to do so due to illness or incapacity.
+Also known as an advance decision.
-== See also ==
-* [[Credit rating]]
-* [[Covenant]]
-* [[Maintenance covenant]]
-* [[Ratings trigger]]
-* [[Springing covenant]]