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| {{fullanat|isda|5(a)(v)|2002}} | | {{fullanat|isda|5(a)(v)|2002}} |
| Cross acceleration is like [[cross default]], but it only arises when the [[non-defaulting party]]has actually [[accelerated]] the contract. Therefore it is a higher threshold and a less sensitive trigger.
| | {{cross acceleration capsule}} |
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| You can amend {{isdaprov|Cross Default}} under the {{isdama}} to {{isdaprov|Cross Acceleration}} as follows: | | You can amend {{isdaprov|Cross Default}} under the {{isdama}} to {{isdaprov|Cross Acceleration}} as follows: |
Revision as of 16:14, 4 September 2017
2002 ISDA
- 5(a)(v) Default Under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:―
- (1) defaults (other than by failing to make a delivery) under a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction;
- (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment due on the last payment or exchange date of, or any payment on early termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one Local Business Day);
- (3) defaults in making any delivery due under (including any delivery due on the last delivery or exchange date of) a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, all transactions outstanding under the documentation applicable to that Specified Transaction; or
- (4) disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, a Specified Transaction or any credit support arrangement relating to a Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that party, Credit Support Provider or Specified Entity (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
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Cross acceleration is like cross default, but it only arises when the non-defaulting party has actually accelerated the contract. Therefore it is a higher threshold and a less sensitive trigger, and avoids that weird scenario when the actual creditor has not itself triggered its default rights, but an opportunistic third party holder of a cross default right can jump in and close out anyway (therefore making the benign creditor less likely itself to show leniency for the original default, it being a nasty, brutish and short old world out there).
You can amend Cross Default under the ISDA Master Agreement to Cross Acceleration as follows: