Cross acceleration - ISDA Provision: Difference between revisions

{{ISDA Master Agreement 2002 5(a)(vi)}}

}}}}“Cross acceleration” is not an ''actual'' ISDA {{isdaprov|Event of Default}}, but it is what ''happens'' to an actual ISDA Event of Default — namely, the much-negotiated, seldom-used Section {{isdaprov|5(a)(vi)}},  {{isdaprov|Cross Default}} EOD, if you can persuade your credit department to water it down to something sensible.

===Cross acceleration: what ''is'' it?===

{{cross acceleration capsule}}

You can amend {{isdaprov|Cross Default}} to {{isdaprov|Cross Acceleration}} by adding the following language:

:Section {{isdaprov|5(a)(vi)}} is amended by deleting “, or becoming capable at such time of being declared,” from subsection (1). <br>

===Explain this wondrous drafting to me!===

{{isdaprov|Cross Default}}, as per the panel to the right, is triggered by two kinds of default:

You may roll your eyes at this — the [[JC]] certainly does — and while it might make you feel better for a moment, it won’t make the problem go away. The short answer is that ''ordinary'' [[grace period]]s ''are'' factored in if you would care to read the language — the event isn’t triggered until they have all expired, and as for contractual affordances that don’t quite count as [[grace period]]s (that are, for example, dependent on the borrower providing evidence of [[operational error]] to give it some more time to pay) — well, on a [[fair, large and liberal]] view these count as [[grace period]]s anyway, and if you aren’t persuaded of that [[I’m not going to die in a ditch about it|am I going to die in a ditch about it]]? It depends how late it is on a Friday. At the time of writing it is 6:30 pm and the [[JC]] is like ''oh pleeeeease''.

===Is “downgrading” to [[cross acceleration]] ''wise'', though?===

There are two schools of thought: