Shared Collateral Agreement

Less commercial issues are also addressed, such as the appointment and removal of the protection officer and his responsibility for acts performed in the performance of his duties (except intentional misconduct, fraud, etc.). The Common Guarantee Agreement stipulates that anyone who acquires a stake in one of the loans must join as a party. In summary, the common guarantee agreements aim to replicate as much as possible the security package that would be obtained from a single group of lenders, but for the benefit of all. One of the most important tasks of a common guarantee agreement is to provide a common set of security measures for the benefit of all participating lenders. Instead, each group of lenders has its own security agreements (mortgage loans, commitments, assignments, security interests, etc.), the borrower (and often related parties who hold project assets – such as shareholders holding stakes in the project company, project marketing companies, etc.) grants one or more hedge agents or trustees a single set of guarantees to all lenders or groups of lenders. This avoids conflicting security conditions and allows lenders to benefit from a single guarantee package (although the common guarantee agreement may nevertheless provide that a group of lenders is primarily a standing group or subordinated to another group, as shown below). This agreement also significantly reduces the financing burden for project proponents who would otherwise be forced to negotiate security packages with several groups of lenders (and possibly obtain multiple agreements from several counterparties, including the host government, on security agreements). Many lenders are reluctant to enter into agreements that would jeopardize their ability to obtain adequate compensation in the event of a borrower`s late payment. Entrepreneurs seeking financing from multiple sources may find themselves in difficult positions when borrowers need security agreements for their assets. Small businesses, in particular, can only have a small number of real estate or assets that can be used as a credit guarantee guarantee. The Common Guarantees Agreement generally covers the right of priority lenders to pay the full subordinated debt in the event of bankruptcy before any payment of subordinated debt.

Beyond this fundamental issue, common guarantee agreements often include declarations of waiver of lenders subject to various rights in the event of bankruptcy, such as law. B to challenge the validity of priority credit documents or the guarantee rights of priority lenders (this waiver may be reciprocal on the part of both principal lenders and subordinated creditors) and any right to obtain the judicial power to obtain the annulment of the bankruptcy filing and exercise security rights. It may also expressly restrict the right of subordinate lenders to offer debtor financing (i.e. financing for the debtor under bankruptcy protection) to previously agreed circumstances or to prohibit them altogether, since in some legal systems the financing of debtors may take precedence over the debts of priority lenders. The common guarantee agreement may also include prior approval by subordinate lenders for the financing of the loan by priority lenders (including the subordination of debt subject to such financing), the use of cash guarantees by or with the agreement of priority lenders and similar consents.