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ISDA Anatomy™
In a Nutshell™ Section Unpaid Amounts:
“Unpaid Amounts” owing to any party means, with respect to a Early Termination Date, the aggregate, in each case as at such Early Termination Date, and together with any the Non-Defaulting Party’s Expenses, of:
- (a) in respect of all Terminated Transactions, all amounts that had become payable but which remain unpaid;
- (b) in respect of each Terminated Transaction, the fair market value of each obligation which had become due for delivery but has not been delivered; and
- (c) where all Transactions are being terminated on the Early Termination Date, any due but unpaid Early Termination Amounts relating to a prior Termination Event,
together in each case with accrued but unpaid interest.
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2002 ISDA full text of Section Unpaid Amounts:
“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of
- (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii) or due but for Section 5(d)) to such party under Section 2(a)(i) or 2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date,
- (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii) or 5(d)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered and
- (c) if the Early Termination Date results from an Event of Default, a Credit Event Upon Merger or an Additional Termination Event in respect of which all outstanding Transactions are Affected Transactions, any Early Termination Amount due prior to such Early Termination Date and which remains unpaid as of such Early Termination Date,
in each case together with any amount of interest accrued or other compensation in respect of that obligation or deferred obligation, as the case may be, pursuant to Section 9(h)(ii)(l) or (2), as appropriate.
The fair market value of any obligation referred to in clause (b) above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it will be the average of the Termination Currency Equivalents of the fair market values so determined by both parties.
The line breaks are for comprehension and do not appear in the original
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Click here for the text of Section Unpaid Amounts in the 1992 ISDA
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You may want to know where Unpaid Amounts feature in the ISDA Master Agreement. The answer: In Payments on Early Termination: Section 6(e)(i) (for Events of Default) and 6(e)(ii) (for Termination Events) and 6(e)(iv) (Adjustment for Illegality or Force Majeure Event).
Spoddy point for old-fashioned 1992 ISDA hipster types: if “Loss” is your chosen means of close-out valuation, the concept of Unpaid Amounts is more or less factored into the definition of Loss:
- Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies...
This is why the drafting of the Default provision (paragraph 6) of the 1995 CSA is as tortuous as it is. If you were wondering.