Template:M detail 2002 ISDA 6(f): Difference between revisions

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===Bespoke wording to capture affiliate set-off===
===Bespoke wording to capture affiliate set-off===
If you are the “live-dangerously” sort who wants to capture cross-affiliate set off, try amending the first line of Section 6(f) to read as follows:
If you are the “live-dangerously” sort who wants to capture cross-affiliate set off, try amending the first line of Section {{isdaprov|6(f)}} to read as follows:


{{quote|{{isdaprov|6(f)}} '''{{isdaprov|Set-Off}}'''. Any {{strike|Early Termination Amount|amounts, whether or not arising under this Agreement, matured, contingent and irrespective of their currency, place of payment or booking}} payable to one party {{strike||or its Affiliates, if it is the Non-defaulting Party or Non-affected Party}} (the “'''{{isdaprov|Payee}}'''”) by the other party {{strike||or its Affiliates, if it is the Non-defaulting Party or Non-affected Party}} (the “'''{{isdaprov|Payer}}'''”), ... }}
{{quote|{{isdaprov|6(f)}} '''{{isdaprov|Set-Off}}'''. Any {{strike|Early Termination Amount|amounts, whether or not arising under this Agreement, matured, contingent and irrespective of their currency, place of payment or booking}} payable to one party {{strike||or its Affiliates, if it is the Non-defaulting Party or Non-affected Party}} (the “'''{{isdaprov|Payee}}'''”) by the other party {{strike||or its Affiliates, if it is the Non-defaulting Party or Non-affected Party}} (the “'''{{isdaprov|Payer}}'''”), {{font colour|#54595d|in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger}} {{font colour|#a2a9b1|has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions}} {{font colour|#c8ccd1|has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be (“X”)}} {{font colour|#eaecf0|(and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts (“Other Amounts”)}} {{font colour|#f8f9fa|payable by the Payee to the Payer (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation).}}}}


From the [[prose stylist]]’s point of view this is quite the monstrous contraption. But the “ISDA way” ''leads us'' to this outcome.
From the [[prose stylist]]’s point of view this is quite the monstrous contraption. But the “ISDA way” ''leads us'' to this outcome.
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So what are we trying to say here, and is there a better way of saying it?
So what are we trying to say here, and is there a better way of saying it?


Firstly, we are talking only about situations where there is a ''catastrophic'', credit-induced close-out of the whole ISDA. — one that precipitates the total breakdown of the relationship between Party A and Party B.
Firstly, we are talking only about situations where there is a ''catastrophic'', credit-induced close-out of the whole ISDA — one that precipitates the total breakdown of the relationship between the parties. In any other case neither party would use a mandatory set-off.


Secondly, the {{isdaprov|Innocent Party}} — the [[JC]] made this term up, by the way, but it is useful — is the one who is bringing its own Affiliate rights and liabilities into the frame for set-off. It cares not one whit for the Guilty Party, which is presently smoking hulk straddling the median strip, remember, much less any of its Affiliates (who are most likely similarly indisposed).
Secondly, the {{isdaprov|Innocent Party}} — the [[JC]] made this term up, by the way, but it is useful — is the one who is bringing its own {{isdaprov|Affiliate}} rights and liabilities into the frame for set-off. It cares not one whit for the Guilty Party, which is presently smoking hulk straddling the median strip, remember, much less any of its Affiliates (who are most likely similarly indisposed).


So how might we say this, given a fresh piece of paper?  
So how might we say this, given a fresh piece of paper?  


{{quote|{{isdaprov|6(f)}} Following the designation of an {{isdaprov|Early Termination Date}} for all {{isdaprov|Transaction}}s, an {{isdaprov|Innocent Party}} may, by notice, [[set-off]] any {{isdaprov|Payable}}s it owes against any {{isdaprov|Payable}}s the other {{isdaprov|Party}} owes the {{isdaprov|Innocent Party}}, converting currencies if necessary and estimating unascertained obligations in [[good faith]], but the {{isdaprov|Innocent Party}} must account for any difference between its estimate and the amount when it is finally ascertained. In this clause: <br>  
{{quote|{{isdaprov|6(f)}} '''{{isdaprov|Set-off}}''': Following the designation of an {{isdaprov|Early Termination Date}} for all {{isdaprov|Transaction}}s where there is one {{isdaprov|Innocent Party}}, that party may, by notice, [[set-off]] any {{isdaprov|Payable}}s it owes against any {{isdaprov|Payable}}s the other party owes the {{isdaprov|Innocent Party}}, converting currencies if necessary and estimating unascertained obligations in [[good faith]], but accounting for any difference between its estimate and the amount when it is finally ascertained. In this clause: <br>  
'''{{isdaprov|Innocent Party}}''' means a {{isdaprov|Non-defaulting Party}} or a {{isdaprov|Non-affected Party}}, [[as the case may be]] and, when  determining any Payables owed by or to such a party, includes its Affiliates”.<br>
'''{{isdaprov|Innocent Party}}'''means a {{isdaprov|Non-defaulting Party}} or a {{isdaprov|Non-affected Party}}, [[as the case may be]] and, when  determining any {{isdaprov|Payable}}s owed by or to such a party, includes its {{isdaprov|Affiliate}}s.<br>
“'''{{isdaprov|Payable}}'''” means any amount owed by the party in question, whether or not arising under this Agreement, matured or contingent and irrespective of its currency, place of payment or booking.}}
“'''{{isdaprov|Payable}}'''” means any amount owed by the party in question, whether or not arising under this Agreement, matured or contingent and irrespective of its currency, place of payment or booking.}}