Finance party default — facility agent

In times of financial crisis, it is not just borrowers who are under financial pressure. Finance parties (eg lenders, facility agents and security trustees) are also at risk of getting into financial difficulty. Facility documents have developed over time (particularly as a result of the financial crisis which began in 2008) to deal with issues raised by the credit risk of the finance parties.

Facility agents play a crucial role in the mechanics and administration of syndicated facility agreements. If they do not perform their duties, both the lenders and the borrower can be adversely affected.

This guidance note explains the key issues involved where a facility agent is in financial difficulty, including:

• • the key areas of concern in relation to the facility agent's role in syndicated facility agreements;
• • the key elements of common provisions in facility agreements which are included to deal with the credit risk of the facility agent; and
• • points to note when dealing with a facility agreement which has an impaired facility agent.

Where appropriate, this guidance note highlights relevant provisions in the highlights relevant provisions in the APLMA Australian secured term and multicurrency revolving syndicated facility agreement.

See Finance party default — facility agent.