Template:Isda 5(a)(vii) summ
The market standard “bankruptcy” definition
The ISDA {{{{{1}}}|bankruptcy}} definition is rarely a source of great controversy (except for the grace period, which gets negotiated only through custom amongst ISDA negotiators because, in its wisdom, ISDA’s crack drafting squad™ thought fit to halve it from 30 days to 15 in the 2002 ISDA.
So you have a sort of pas-de-deux between negotiators where they argue about it for a while before getting tired, being shouted at by their business people, and moving on to something more important to argue about, like {{{{{1}}}|Cross Default}}).[1]
Otherwise, the ISDA {{{{{1}}}|bankruptcy}} clause is a much loved and well-used market standard and you often see it being op-opted into other trading agreements precisely because everyone knows it and no one really argues about it.
1987 ISDA and Automatic Early Termination
Note, for students of history, Automatic Early Termination is (was, right? Oh, come on, guys —) problematic under the 1987 ISDA.
- ↑ This, by the way, is an ISDA In-joke. In fact, Cross Default is pretty much pointless, a fact that every ISDA ninja and credit officer knows, but none will admit on the record. It is the love that dare not speak its name.