Shared Collateral Agreement

Disclaimer: In this section of the legal agreement, the disclaimers that must be issued to both the lenders` consortium and the debtors are clearly mentioned and outlined. Any guarantee is most likely concluded with all existing groups of lenders under the Common Guarantee Agreement. However, while the new infrastructure is being built, lenders still have nothing of value for this infrastructure to contribute to the common security pool, so that, as a rule, they cannot participate in the existing common security. Once an extension project is completed, these lenders will become full participants in the common security agreement. The borrower may have limited options to provide guarantees that would satisfy lenders. Even if a security agreement grants only a partial security interest to the property, lenders may be reluctant to offer financing for the property. The possibility of cross-protection would remain, which would require the liquidation of the property to attempt to release its value and compensate the lenders. Effective date: In this section of the legal agreement, the important dates of the contract are clearly marked. These include the start date of the transaction, the date the funds were paid, the date the assets were assessed, and the date the funds must be repaid at the same time as the interest. As the discussion above shows, a common guarantee agreement is a bespoke document negotiated for specific groups of lenders, a particular borrower and a particular project. This discussion addressed a number of major concerns of these agreements, but it was scraped to the surface to address the wide variety of agreements found in the world of project financing.

Whether in a bankruptcy scenario or otherwise, payments improperly received by a subordinate lender to which priority lenders are entitled under the terms of the Common Guarantee Agreement are considered to be in trust for the benefit of priority lenders and must be transferred to them. Lender groups will also look at decision-making on issues of common interest, including decisions on the application of their security. Enforcement decisions may include whether security should be implemented and, if so, when and how security will be implemented. Such a decision usually requires a vote by lenders, with the common guarantee agreement setting a threshold for the pass mark. In different scenarios, different passport stamps may apply and require a certain level of approval within each credit group or between all credit groups as a whole or both. As a general rule, each credit group may require, in a bankruptcy scenario, that the security recycler take advantage of the guarantee.