Liquidation/Application of Posted Credit Support (VM) - NY VM CSA Provision: Difference between revisions

Liquidation/Application of Posted Credit Support (VM) - NY VM CSA Provision (view source)

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-{{nycsaanatn|10(c)|}}
+{{nycsaanatn|10(c)|2016}}
+Note the references here are to the {{isdaprov|Expenses}} section (Section {{isdaprov|11}}) in the {{isdama}} and not the {{nyvmcsaprov|Expenses}} ''paragpraph'' (Paragraph 10) in the  {{nyvmcsa}}. Alles klaar, as usual.
+And “{{isdaprov|Defaulting Party}}” is term from the {{isdama}}, not the {{nyvmcsa}} — it means the person who has committed a Section {{isdaprov|5(a)}} {{isdaprov|Event of Default}} — and is to be contrasted with an “{{isdaprov|Affected Party}}”, being a person who has is subject to a Section {{isdaprov|5(b)}} {{isdaprov|Termination Event}}.
+==={{isdaprov|Events of Default}} versus {{isdaprov|Termination Events}}: a refresher===
+Remember {{isdaprov|Termination Event}}s are, in the main, less odious than {{isdaprov|Events of Default}}, inviting less of the opprobrium on the head of those who suffer them than {{isdaprov|Failure to Pay}}, {{isdaprov|Breach of Agreement}} or {{isdaprov|Bankruptcy}}. And they are less likely to lead directly and immediately to the total implosion of the {{isdaprov|Affected Party}}.
+So the interesting question, posed not entirely rhetorically for {{icds}}, is precisely ''when'' in the absence of an {{isdaprov|Event of Default}} and thus a {{isdaprov|Defaulting Party}}, one would be [[Enforcement event|enforcing]] on, and therefore liquidating and applying, {{nyvmcsaprov|Posted Credit Support}}. Not often. You don’t generally enforce security against a solvent counterparty who has suffered a {{isdaprov|Tax Event Upon Merger}} and can just pay you back.
+==={{isdaprov|Additional Termination Event}}s: the ugly duckling of {{isdaprov|Termination Events}}===
+There is one case where you might: the {{isdaprov|Additional Termination Event}}, which is a customised {{isdaprov|Termination Event}} added in by the parties. These things — examples are [[NAV triggers]] and [[Key person event]]s — tend to be directly credit-related and apocalyptic in nature than the preprinted {{isdaprov|Termination Event}}s and thus have more of the characteristics of {{isdaprov|Events of Default}}.  They are the one time you might be enforcing on pledged collateral (but even in this case it would be unlikely unless the ATE quickly descended into a full-blown Event of Default — which if you were closing out, it could quite likely do — in which case the trick would be to characterise your close out as being predicated on the later Event of Default.
+So, in any case if you close out on an [[ATE]], you have to share the enforcement costs, but if it is a full blown {{isdaprov|Event of Default}}, you can peg them all on the Defaulting Party.
+An odd and probably unintended complexity, it seems to this observer.
+{{sa}}
+*{{isdaprov|Events of Default and Termination Events}} for a more in-depth discussion of the differences between {{isdaprov|Events of Default}}and {{isdaprov|Termination Events}}.