Events of default

Most facility agreements therefore include a mechanism under which a lender can, if it chooses, take certain actions if the borrower breaches the loan agreement or certain other events occur. The events that allow the lender to take such action are normally specifically set out in the facility agreement and are referred to as “events of default”.

This guidance note considers:

• • the purpose of events of default included in facility agreements;
• • common events of default relating to borrowers and guarantors;
• • continuing events of default;
• • the differences between an event of default, default and potential event of default; and
• • alternatives for lenders to acceleration.

Where appropriate, this guidance note highlights relevant provisions in the Asia Pacific Loan Market Association (APLMA) Australian secured term and multicurrency revolving syndicated facility agreement.

See Events of default.