Template:Extinction vs no debt due

There was once an arid discussion about whether it was better to say, upon exhaustion of all assets, that a limited recourse debt was “extinguished”, or “not due” in the first place. This was weakly supported by coal-face lawyers at places like Linklaters (in the “no debt due” camp) and Clifford Chance (“extinction”), vociferously propelled by their partners, but left the rest of us with a hard-to-articulate but quite persistent sense that there really ought to be better things for masters of the universe of structured finance to worry about. Such as, “how on Earth is it that people who worry about these things get paid so much?”

As with all wanton acts of pedantry, this one has an intellectual grounding, but it is so brittle it will make you angry: the concern about “extinction” is that it implies that, at that very instant that final settlement drop drained from the company’s veins, the debt was still there in, Q.E.D., an amount which the company was, at that frozen instant in the ineffable cosmos, theoretically unable to pay — until in the next infinitesimal subdivision of time, when the debt it vanished. But, for just that fleeting angel’s blink, the company was technically insolvent. These people prefer to say “no debt is due” on the supposition that this can have some magical retrospective effect, re-rendering the fresco on which the arrow of time has already cast his pigment, or some such thing.