Template:M summ Pledge GMSLA 10: Difference between revisions

[[10 - Pledge GMSLA Provision|To]] be read with the commentary paragraph {{pgmslaprov|11}} ({{pgmslaprov|Consequences of an Event of Default}}) and verily the accompanying {{pgmslaprov|Security Agreement}}, for the way close-out happens under a [[pledge]] structure is markedly different from the [[close-out netting]] regime of the {{gmsla}}.

[[10 - Pledge GMSLA Provision|Now]] there’s a subtle point to look out for here about control over assets. If, as you are likely to have under a {{pgmsla}}, you have ''[[pledge]]d'' your assets to an [[escrow agent]] or third party [[custodian]], the key (for your financial reporting friends and relations) will be that you retain ownership of those assets and, more to the point, they stay ''outside'' the [[insolvency estate|bankruptcy estate]] of your {{pgmslaprov|Lender}}. That’s the whole reason you have the {{pgmsla}} and not an ordinary [[title-transfer]] {{gmsla}} in the first place — to avoid having to hold capital against the credit risk of your {{pgmslaprov|Lender}}s for the return of excess {{pgmslaprov|Collateral}}.

:''Each {{pgmslaprov|Event of Default}} listed in Paragraph {{pgmslaprov|10.1}}(a), (b) and (c) will become {{pgmslaprov|Events of Default}} only if, within 2 hours following the {{pgmslaprov|Lender}}’s written notice to the {{pgmslaprov|Borrower}} of the event in question, {{pgmslaprov|Borrower}} has not cured the relevant default in full. Upon the expiry of that 2-hour period without such cure, the {{pgmslaprov|Event of Default}} will occur immediately without the need for further notice from the {{pgmslaprov|Lender}}.''