Cross acceleration - ISDA Provision

Cross acceleration is not an actual ISDA term, but is what happens to an ISDA Section 5(a)(vi) Cross Default if you can persuade your credit department to water it down to something sensible.

Cross acceleration - what is it?

Cross acceleration is like cross default, but it only arises when the non-defaulting party has actually accelerated the contract. Therefore it is a higher threshold and a less sensitive trigger, and avoids that weird scenario when the actual creditor has not itself triggered its default rights, but an opportunistic third party holder of a cross default right can jump in and close out anyway (therefore making the benign creditor less likely itself to show leniency for the original default, it being a nasty, brutish and short old world out there).

Amending to Cross Default to cross acceleration

You can amend Cross Default to Cross Acceleration as follows:

Section 5(a)(vi) is amended by deleting “, or becoming capable at such time of being declared,” from subsection (1).

See also

• Cross default generally