|
|
| (11 intermediate revisions by the same user not shown) |
| Line 1: |
Line 1: |
| {{isdaanat|6(b)(iv)}} | | {{nman|isda|2002|6(b)(iv)}} |
| What a beast. If you track it through in {{tag|nutshell}} terms, it isn’t as bad as it first seems, but you have the derivative lawyer’s gift for over-complication, and the ISDA drafter’s yen for dismal drafting, to thank for this being the trial it is.
| |
| | |
| To make it easier, we’ve invented some concepts: Unaffected Party and Unaffected Transaction - saves you all that mucking around saying the party who is not the Affected Party and so on)
| |
| | |
| Here is how it works.
| |
| | |
| Keep in mind that, unlike {{isdaprov|Events of Default}}, {{isdaprov|Termination Event}}s can arise through no fault of the {{isdaprov|Affected Party}} and are not always apocalyptic in consequence. Depending what they are, they may be cured, worked around, or dented Transactions may be surgically trimmed out, allowing the remainder of the Agreement, and the Unaffected Transactions, to carry on as normal. So here goes:
| |
| | |
| ====Divide up the types of {{isdaprov|Termination Event}}====
| |
| # Tax ones: If a {{isdaprov|Tax Event}} or a {{isdaprov|TEUM}} ''where the party merging is the one that suffers the tax'', the parties have a month to try to rearrange matters between them, their offices and affiliates to avoid the tax issue. Only once that has failed are you in {{isdaprov|Termination Event}} territory. ''See Section {{isdaprov|6(b)}}(ii) and {{isdaprov|6(b)(iii)}}'''.
| |
| # {{isdaprov|Unaffected Party}} ones: If it's a CEUM, an ATE or a TEUM ''where the {{isdaprov|Unaffected Party}} suffers the tax''
| |
| # {{isdaprov|Illegality}} and {{isdaprov|Force Majeure}}: Here there may be a {{isdaprov|Waiting Period}} to sit through, to see whether the difficulty clears (For {{isdaprov|Force Majeure Event}} it is eight {{isdaprov|Local Business Day}}s; for {{isdaprov|Illegality}} ''other than one preventing performance of a {{isdaprov|Credit Support Document}}'': three {{isdaprov|Local Business Day}}s; Sit through it.
| |
| ::Why is there exception for {{isdaprov|Illegality}} on a {{isdaprov|Credit Support Document}}? Because, even though it wasn’t your fault, illegality of a {{isdaprov|Credit Support Document}} profoundly changes your credit assessment (in a way that arguably, even a payment or delivery obligation doesn’t), and that is the most fundamental risk you are managing under the {{isdama}}.
| |