Absence of Litigation - ISDA Provision: Difference between revisions

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 ===[[Absence of litigation]] generally===
 An [[absence of litigation]] representation seeks to address litigation carrying two particular risks:
-*'''Enforceability''': Litigation that could somehow undermine or prejudice the enforceability of the agreement you are presently negotiating;
+*'''Enforceability''': Litigation that could somehow undermine or prejudice the very enforceability of life was we know it (a.k.a the agreement you are presently negotiating);
-*'''Credit deterioration''': Litigation that is so monstrous that it could basically put your counterparty out of business altogether, with amounts still owing to you under the agreement you’re negotiating.
+*'''Credit deterioration''': Litigation that is so monstrous in scope that it threatens to wipe your [[counterparty]] from the face of the earth altogether, while it still owes you under the agreement you’re negotiating.
-====Enforceability-threatening litigation====
-Firstly, Earth to Planet ISDA: what kind of {{tag|litigation}} or regulatory action — we presume about something unrelated to this agreement since, by your theory, ''it doesn’t damn well exist yet'' — could adversely impact in the ''enforceability'' of this future private legal {{t|contract}} between one of the litigants and an unrelated, and ignorant, third party? Seach me.
-If the litigation is so material it will bankrupt the fund altogether then we have way, way bigger problems in our risk management dept, and if we are only catching that through a litigation rep, then we are properly asleep at the switch. And further more if they make this rep, and it’s wrong, how does having the rep help us?
+====Enforceability-threatening {{tag|litigation}}====
+Firstly, Earth to Planet ISDA: what kind of {{tag|litigation}} or regulatory action — we presume about something unrelated to this agreement since, by your theory, ''it doesn’t damn well exist yet'' — could adversely impact in the ''enforceability'' of this future private legal {{t|contract}} between one of the litigants and an unrelated, and ignorant, third party?
-Nonetheless, that is one for Credit/Risk. But from my perspective I have never really seen the practical value of this rep (though most clients don’t object to it for that exact reason).
+Search me. But still, I rest assured there will an [[Mediocre lawyer|ISDA boxwallah]] out there somewhere who could [[Chicken Licken|think of something]].
+====Existentially apocalyptic {{tag|litigation}}====
+Look, if your [[counterparty]] is banged up in court proceedings so awful to behold that an adverse finding might bankrupt it altogether, and your credit sanctioning team hasn’t got wind of it independently then, friend, you have way, way bigger problems than whether you have this feeble covenant. And, if you are only catching it at all thanks to a carelessly given [[absence of litigation]] rep, by the time said {{tag|litigation}} makes itself known to you<ref>Judgment day, in other words.</re>''won’t it be a bit late''?
+====Pick your battles====
+All that said, and probably for all of the above reasons, parties tend not to care less about this representation too vehemently, so your practical course is most likely to leave it where you find it.
 {{seealso}}
 *[[Representation]]