Lehman provisions

Borrowing and lending - documentation - finance party default - Loan Market Association (LMA).

Lehman provisions are parts of loan agreements designed to address the risk of default by a lender or an agent bank.

Commentary on the Lehman provisions

"The risk of finance party default under a loan agreement is a risk factor that the loan market moved swiftly to address following the collapse of Lehman Brothers.

The LMA’s response was to create a set of optional 'Finance Party Default' clauses, which were first published in 2009. These are often colloquially referred to as the 'Lehman provisions'...

Most of the Lehman provisions are a welcome addition to facility documentation for borrowers.

They are widely used and, generally speaking, the main concepts addressed by the LMA drafting will be familiar to those who have negotiated loan documentation since 2009.

This might suggest that the most commonly used aspects should be incorporated into the Investment Grade Agreements..."

The ACT Borrower’s Guide to the LMA’s Investment Grade Agreements - 6th edition - 2022 - p377.

See also

• Default
• Defaulting lender
• Documentation
• Event of default
• Facility
• Finance party default
• Impaired agent
• Investment Grade Agreements
• Lehman
• Loan agreement
• Loan Market Association (LMA)
• Provision

Other resource

• The ACT Borrower’s Guide to the LMA’s Investment Grade Agreements - 2022 - p377