Right to Terminate Following Event of Default - ISDA Provision
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This summary is good for either version.
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6(a) in a Nutshell™ (ISDA edition)
6(a) Right to Terminate following Event of Default. If one party (“Defaulting Party”) suffers an Event of Default, the other (the “Non-defaulting Party”) may, by not more than 20 days’ notice, designate an Early Termination Date for all outstanding Transactions. If Automatic Early Termination applies to the Defaulting Party and the Event of Default it is qualifying Bankruptcy event, the Early Termination Date will occur:
- (i) upon the Bankruptcy event, if under 5(a)(vii)(1), (3), (5) or (6) or if analogous, (8); and
- (ii) immediately before institution of the relevant proceeding, if under 5(a)(vii)(4) or if analogous, (8).
Those with a keen eye will notice that, but for the title, Section 6(a) of the 2002 ISDA is the same as Section 6(a) of the 1992 ISDA.
Once you have designated an Early Termination Date for your ISDA Master Agreement, proceed to 6(c) to understand the Effect of Designation.
Or Learn about it in one place at Closing out an ISDA Master Agreement.
Next: Section 6(b) of the ISDA Master Agreement.