Additional Termination Event - ISDA Provision: Difference between revisions

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'''Best Practice Note''': Therefore adding any new {{isdaprov|Termination Event}} must ALWAYS be achieved by labelling it a new {{isdaprov|Additional Termination Event}} under Section {{isdaprov|5(b)(v)}}, and not a separate event under a new Section {{isdaprov|5(b)(vi)}} etc.  
'''Best Practice Note''': Therefore adding any new {{isdaprov|Termination Event}} must ALWAYS be achieved by labelling it a new {{isdaprov|Additional Termination Event}} under Section {{isdaprov|5(b)(v)}}, and not a separate event under a new Section {{isdaprov|5(b)(vi)}} etc.  
If, instead of being expressed as an “{{isdaprov|Additional Termination Event}}” under section {{isdaprov|5(b)(v)}}, which is how the ISDA Mechanism is intended to operate, it is set out as a new “{{isdaprov|5(b)(vi)}}” it is not designated therefore as any of an “{{isdaprov|Illegality}}”, “{{isdaprov|Tax Event}}”, “{{isdaprov|Tax Event Upon Merger}}”, “{{isdaprov|Credit Event Upon Merger}}” or “{{isdaprov|Additional Termination Event}}”, so therefore, read literally, is not caught by the definition of “{{isdaprov|Termination Event}}” and none of the Termination provisions bite on it.
If, you try to make it into a new “{{isdaprov|5(b)(vii)}}” it is therefore ''neither'' an “{{isdaprov|Illegality}}”, “{{isdaprov|Tax Event}}”, “{{isdaprov|Tax Event Upon Merger}}”, “{{isdaprov|Credit Event Upon Merger}}” ''or'' “{{isdaprov|Additional Termination Event}}”. Read literally, is will not be caught by the definition of “{{isdaprov|Termination Event}}” and none of the Termination provisions will bite on it.


I mention this because I have seen it happen. Yes,you can take a “fair, large and liberal view” that what the parties intended was to create an {{isdaprov|ATE}}, but why suffer that anxiety?
I mention this because I have seen it happen. Yes,you can take a “fair, large and liberal view” that what the parties intended was to create an {{isdaprov|ATE}}, but why suffer that anxiety?


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Revision as of 16:24, 23 September 2016

Numbering Discrepancy: Note the numbering discrepancy in Section 5(b) between the 1992 ISDA and 2002 ISDA. This is caused by a new 5(b)(ii) (Force Majeure Event) in the 2002 ISDA before Tax Event, which is thus shunted from Section 5(b)(ii) (in the 1992 ISDA) to Section 5(b)(iii) (in the 2002 ISDA).

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Tricks for the Young Players

Termination Event is defined as “an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event”.

Best Practice Note: Therefore adding any new Termination Event must ALWAYS be achieved by labelling it a new Additional Termination Event under Section 5(b)(v), and not a separate event under a new Section 5(b)(vi) etc. If, you try to make it into a new “5(b)(vii)” it is therefore neither an “Illegality”, “Tax Event”, “Tax Event Upon Merger”, “Credit Event Upon Merger” or “Additional Termination Event”. Read literally, is will not be caught by the definition of “Termination Event” and none of the Termination provisions will bite on it.

I mention this because I have seen it happen. Yes,you can take a “fair, large and liberal view” that what the parties intended was to create an ATE, but why suffer that anxiety?

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