Impaired agent

Borrowing and lending - documentation - finance party default.

The concept of an impaired agent bank is an element of borrowing and lending agreements, designed for the protection of the borrower and other lenders under the agreement.

It includes situations in which the agent bank fails to honour its commitment to make a payment under borrowing documentation, becomes insolvent, or is a defaulting lender.

When an agent becomes an impaired agent under the borrowing documentation, the borrower and majority lenders enjoy additional rights to protect their positions.

Impaired agent provisions are a part of Lehman provisions.

Impaired agent provisions widely used

"These provisions [are widely] used and available in a version suitable for swingline facilities."

The ACT Borrower’s Guide to the LMA’s Investment Grade Agreements - 6th edition - 2022 - p380.

See also

• Agent bank
• Arranger
• Default
• Defaulting lender
• Documentation
• Event of default
• Finance party default
• Investment Grade Agreements
• Lehman provisions
• Loan agreement
• Loan Market Association (LMA)
• Syndicate

Other resource

• The ACT Borrower’s Guide to the LMA’s Investment Grade Agreements - 2022 - p379-380