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Loan Provisions Notes

LPC Law Notes > Debt Finance Notes

This is an extract of our Loan Provisions document, which we sell as part of our Debt Finance Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Debt Finance Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Loan Provisions Purpose clause and illegalityRestricts borrower to agreed and legal purposes only.Violation = default of contract --> monies subject to a resulting trust in favour of lender (advantage on winding up).If lender aware of illegality --> English law sees loan as void and unenforceable and will disallow action to recover funds. Cf. subsequent illegality of initially lawful agreement = lender canrecover the funds.

The FacilityTerm loan = short period for drawdown ('availability period') - cf. RCF Or may be available in separate facilities/tranches with differentcharacteristics. Lender's obligation to lend (only in syndicated facilities) 1 Several obligations as between lenders in the syndicate (members responsible for their own commitment only) 2 Separate loans ('proportion' = ratio of commitment against total syndicate commitments) E.g. total syndicate loan of PS25m. 5 banks agree to lend PS5m each.If borrower draws down PS20m, each lender will have a participation of
PS4m. Conditions precedentCPs required will be determined by the due diligence (will be set out in a schedule to the agreement)

1. CPs to the first utilisation (documentary in nature)

2. CPs to each subsequent utilisation (representations repeated as still being true - exact representations to be repeated will be negotiated) FunctionLender's obligation to advance funds will be subject to CPs.CPs will be checked before completions - e.g: Constitutional documentsLegal opinion(s)Insurance policiesFinancial information and auditors reportsLicences/consents relevant to borrowerBoard resolutions and corporate authorisationsCompliance with 'know your client' requirements (usually lender'scompliance team do this)??

Evidence that all fees have been paid Unique CPs for each transaction Can waive CPs or create 'conditions subsequent' which must be met within a certain time following completion. When acting for borrower, check: Time limits

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