Chargor Rights Event - IM CSD Provision

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2018 ISDA Credit Support Deed (IM) (English law)
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Paragraph 13(j) in a Nutshell™

Use at your own risk, campers!

Full text of Paragraph 13(j)

13(j) “Chargor Rights Event” means an Early Termination Date in respect of all Transactions has occurred or been designated as the result of an Event of Default or Access Condition with respect to the Secured Party; provided that:
(i) if “Chargor Full Discharge Condition” is specified as applicable here, a Chargor Rights Event will not occur unless the Chargor
(A) has provided a statement to the Secured Party in respect of such Early Termination Date pursuant to Section 6(d) of the Agreement and
(B) is claiming that an amount under Section 6(e) of the Agreement
(I) is payable to the Chargor,
(II) is zero or
(III) is payable by the Chargor but
(x) has been discharged in full together with any accrued interest or
(y) will be discharged in full together with any accrued interest in whole or in part pursuant to the Chargor’s exercise of the Delivery in Lieu Right as notified in writing by the Chargor to the Secured Party in connection with its delivery of a Chargor Access Notice, if applicable: Chargor Full Discharge Condition is [Applicable/Not Applicable];
and
(ii) if “Cooling-off Period Condition” is specified as applicable here, a Chargor Rights Event will not occur unless two Local Business Days have passed following the provision of a statement to the Secured Party pursuant to Section 6(d) of the Agreement: Cooling-off Period Condition is [Applicable/Not Applicable].

Notwithstanding the foregoing, if “Control Agreement Chargor Rights Event” is specified as applicable here with respect to a party as the Chargor, a “Chargor Rights Event” will only occur upon the occurrence of one or more of the events that the Chargor and the Secured Party have agreed, in the Control Agreement or otherwise, will permit the Chargor to exercise sole and exclusive control of the Posted Credit Support (IM) held under the Control Agreement:

With respect to Party A acting in its capacity as the Chargor and Party B acting in its capacity as the Secured Party: Control Agreement Chargor Rights Event is [Applicable/Not Applicable].
With respect to Party B acting in its capacity as the Chargor and Party A acting in its capacity as the Secured Party: Control Agreement Chargor Rights Event is [Applicable/Not Applicable].

Related agreements and comparisons

Related Agreements
Click here for the text of Section [[- VM CSA Provision|]] in the 2016 ISDA VM CSA
Comparisons
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Content and comparisons

More grist to the “whoever came up with this should be put on trial for crimes against common sense and the English language” mill.

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Summary

Just part of the voyage of utter destruction that is this 2018 English law IM CSD experience: here the question of when a Chargor (the person who posted it) can get its own Posted Credit Support (IM) back. For reasons known only to itself, ISDA has elected to make this once the Chargor has closed out ISDA Master Agreement, but at a time before it has worked out whether it owes anything under it that the Secured Party might want to be paid.

Don’t get me started about all this cooling off period nonsense.

Much more commentary at the broadly analogous Secured Party Rights Event (which is the equivalent of this provision, only where you are triung to get your hands on the other guy’s Posted Credit Support (IM).

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See also

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References

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