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Right to Terminate - ISDA Provision: Difference between revisions
Right to Terminate - ISDA Provision (view source)
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====Divide up the types of {{isdaprov|Termination Event}}==== | ====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)}}'''. | # Tax ones: If a {{isdaprov|Tax Event}} or a {{isdaprov|TEUM}}<ref>That’s “{{isdaprov|Tax Event Upon Merger}}” to the cool kids.</ref> ''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 | # {{isdaprov|Unaffected Party}} ones: If it’s a {{isdaprov|CEUM}}<ref>That’s “{{isdaprov|Credit Event Upon Merger}}” to the cool kids.</ref>, an {{isdaprov|ATE}} or a {{isdaprov|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. | # {{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}}. | ::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}}. | ||