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
m (Add link.)
 
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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 defines 'material'.
 
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.




== See also ==
== See also ==
* [[Conduct]]
* [[Event of default]]
* [[Event of default]]
* [[Loan agreement]]
* [[Loan agreement]]
* [[Material]]
* [[Material adverse effect]]
* [[Material adverse effect]]
* [[Materiality]]


[[Category:Bank_Lending]]
[[Category:Long_term_funding]]
[[Category:Debt_Capital_Markets]]
[[Category:Treasury_operations_infrastructure]]
[[Category:Legal_Documentation]]

Latest revision as of 10:32, 15 July 2021

(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.


See also