There are a number of factors to consider. For example, changes or the definition of “financial documents” in the existing facility agreement, which contains future documents, are important. The fundamental principle must be to check whether security is “all funds” or “specific funds”. As the term indicates, the “total monetary guarantee” generally covers “all funds” owed to the principal debtor (including all obligations that will be incurred in the future). In principle, the security of “all funds” should guarantee modified obligations without the need for a new guarantee. However, it is advisable to obtain written confirmation from the debtors that the existing guarantee remains fully in effect, notwithstanding the changes made. Such confirmation should always be obtained when the amount of debt is increased. Single waivers and consents occur when the borrower`s circumstances have changed more temporarily. For example, it may have had a bad quarter, which led to the temporary break-up of a financial federation. Under these conditions, the borrower will not need a permanent amendment to the facility agreement, but only a short-term waiver from the lenders to prevent it from being late in payment. Sometimes the borrower does not need a waiver from the lenders, but rather the agreement of the lenders for what he wants to do that is prohibited by a negative company in the facility agreement. Ideally, guarantors should accept any changes to the facility agreement.

This can be achieved simply by allowing them to give their consent, by retaliating response to the letter of amendment. However, in cases where guarantors cannot sign (for example. B lack of availability of signatories due to illness or otherwise), it may be possible to continue without confirming it. The vast majority of changes currently requested by lenders (for example. B moratorium on principal repayments, reduction of interest rates and fees and waivers/resets) are favourable to both the borrower and the surety. Commercially, it is therefore highly unlikely that a surety will ever attempt to challenge such a change in the future on the grounds that it had not accepted it at the time. In addition, most standard form guarantees include “all the money” and compensation provisions that, according to the courts, will protect a lender that will modify a proposed organization above. 3.

Check the wording of the existing facility agreement It is useful for a borrower to be able to contact the lender as soon as possible or to derver the facility to avoid any delay. A lender may be required to obtain credit authorization for the proposed changes, or a facility representative may need some time to approach and contact the consortium lenders regarding the amendments.