Right to Terminate - ISDA Provision: Difference between revisions

Right to Terminate - ISDA Provision (view source)

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 To make it easier, we’ve invented some concepts and taken a few liberties:
-*“{{isdaprov|Unaffected Party}}” and “{{isdaprov|Unaffected Transaction}}” — saves you all that mucking around saying “the party who is not the {{isdaprov|Affected Party}}” and *“{{isdaprov|Transaction}}s other than  those that are, or are deemed, to be {{isdaprov|Affected Transaction}}s” and so on)
+*“{{isdaprov|Unaffected Transaction}}” — saves you all that mucking around saying “{{isdaprov|Transaction}}s other than  those that are, or are deemed, to be {{isdaprov|Affected Transaction}}s” and so on)
 *{{isdaprov|Termination Event Notice}} as an elegant and self-explanatory alternative to "after an {{isdaprov|Affected Party}} gives notice under Section {{isdaprov|6(b)(i)}}”
 *We take it as logically true that you can’t give 20 days’ notice of something which you then say will happen in fewer than 20 days. Therefore, there is no need for all this “designate a day not earlier than the day such notice is effective” nonsense.
-So with that all out the way, 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:
+So with that all out the way, 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 {{isdaprov|Unaffected Transaction}}s, 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}}<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 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|Non-Affected 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|Non-Affected 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}}.