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LSTA publishes new provisions to include defaulting lender language
By Sara Rosenberg
New York, March 25 - The Loan Syndications and Trading Association published new Model Credit Agreement Provisions (MCAPs) on Friday, which have been expanded to include model defaulting lender language, according to a news release.
The MCAPs were originally published in 2005 and include the boilerplate provisions typically found in any credit agreement.
The new language in the MCAPs provides that a lender is a defaulting lender if it has failed to fund a portion of its loans within two days of being required to fund, has notified the agent that it does not intend to comply with its funding obligations or made a public statement to that effect, or has become the subject of a bankruptcy proceeding.
Once classified as a defaulting lender, that lender's vote is generally disregarded for any required lender vote, except for on certain key matters.
The language also provides that the borrower may replace the defaulting lender and require that lender to assign its loans and unfunded commitments to an eligible assignee.
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