Sep 182021

(d) Amount of equity – While some lenders limit the amount of equity proceeds to the amount necessary for the denoxing of the default, other lenders only provide that the proceeds should cover at least the total amount necessary to heal such a default for that period, which essentially allows the borrower to accept more cash than is actually needed to repair the default. The lender would obviously prefer to limit the amount of the equity cure to the amount necessary to soften the default, so that the borrower does not use the equity cure as a backdoor way to finance the business in a way that prevents the lender from using its credit credits. On the other hand, the borrower would negotiate to freely determine the amount of equity to be injected. In the case of transactions in which the borrower consists of a group of related undertakings, the provision of own funds could limit the proceeds of equity to funds made available outside the lender`s group to avoid round tripping in the absence of new technically inflows of funds, but simply reservations that do not have a positive effect on the borrower`s financial situation. . . .


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