Template:Isda 6(e)(iii) summ

Section {{{{{1}}}|6(e)(iii)}} is somewhat gnomic, but is designed to build in some flex to allow for the weird things that happen in the netherworld of corporate insolvency, especially where your {{{{{1}}}|Early Termination Date}} happened, thanks to its automatic trigger, without anyone knowing about it.

If an AET has been “dark triggered” (this is an expression I made up to cover an event that has happened to the contract by operation of circumstance without the knowledge of either party), and therefore the parties (especially the {{{{{1}}}|Non-Defaulting Party}}) have blithely carried on with their business of making payments and deliveries unaware that the technical insolvency of one of them meant all payment and delivery obligations were suspended — Section {{{{{1}}}|2(a)(iii)}} and all that — then you will find you have the opposite of {{{{{1}}}|Unpaid Amounts}}: you will have overpaid Amounts. This provision half-heartedly allows you to adjust to take account of them, without saying how: can you credit their full amount back? Do you have to apply some recovery rate?

We suspect most counterparties will credit the full amount and wait, with arguments pre-marshalled about insolvency set-off and restitution for money had and received, for use should the insolvency administrator comes at them.