March 22, 2012
This case study describes a case taken as example only!
RE: Analysis of existing securities under loan agreements in case the Borrower is declared bankrupt. Alternative options for protection of the interests of the Bank in eventual default of the Borrower. Suggestions and advice in relation to the proposed options.
We have prepared this review of agreements and documents which guarantee a Bank’s rights in terms of securities if bankruptcy proceedings are initiated by a borrower or another creditor of a borrower. We have analyzed a number of cases in our practice to try to summarize the position of shareholders as subordinated lenders as well and the position of third party creditors – other than banks which had delivered goods or services to a special purpose company – borrower – a Project Company, incorporated to construct and run a project asset.
There have been several loan agreements between the Bank and the Borrower at the total amount outstanding of 45 million Euro investment loan and 2 million Euro revolving loan: