Foreign Parallel Debt Clause Samples
A Foreign Parallel Debt clause establishes a separate, independent debt obligation owed by a borrower to a security agent or trustee, typically in a different jurisdiction from the main loan agreement. This mechanism is often used in cross-border syndicated loans, where the security agent holds collateral on behalf of multiple lenders, and the parallel debt ensures that the agent has a direct claim against the borrower for the same amount as the lenders. The core function of this clause is to facilitate the enforceability of security interests in jurisdictions that require a direct creditor-debtor relationship, thereby overcoming legal obstacles and ensuring effective collateral enforcement.
Foreign Parallel Debt. (a) Each Loan Party hereby irrevocably and unconditionally undertakes to pay to the Canadian Agent as a separate and independent obligation an amount equal to the total amount owed from time to time by such Loan Party to any Credit Party in respect of its Foreign Principal Obligations as they may exist from time to time. The payment undertaking of each Loan Party to the Canadian Agent under this Section 9.19 (a) is hereinafter referred to as a “Foreign Parallel Debt”. Each Foreign Parallel Debt will be payable in the currency or currencies of the relevant Foreign Principal Obligations.
(b) For the avoidance of doubt it is confirmed that Section 9.19
(a) means that each Foreign Parallel Debt constitutes a payment obligation of the relevant Loan Party to the Canadian Agent which is separate and independent from, and without prejudice to, its Foreign Principal Obligations and shall become due and payable to the Canadian Agent as soon as, and to the extent that, any amount owed by such Loan Party to the relevant Credit Party under its Foreign Principal Obligations becomes due and payable.
(c) Each of the parties to this Agreement acknowledges that each Foreign Parallel Debt represents the Canadian Agent’s own claim to receive payment of such Foreign Parallel Debt from the relevant Loan Party and that the amount which may become due and payable by a Loan Party under its Foreign Parallel Debt pursuant to this Section 9.19 shall never exceed the total amount which becomes due and payable by such Loan Party to the Credit Parties under its Foreign Principal Obligations.
(d) Notwithstanding any of the other provisions of this Section 9.19:
(i) any amount due and payable by a Loan Party under its Foreign Parallel Debt shall, to the extent such Loan Party shall have paid any amounts to any Credit Party under its Foreign Principal Obligations or any Credit Party otherwise receives any amount in payment of such Foreign Principal Obligations (other than by virtue of Section 9.19 (f)), be decreased by equivalent amounts as if such amounts were received directly in payment of such Foreign Parallel Debt on the date of receipt by the relevant Credit Party of such amount in payment of such Foreign Principal Obligations; and
(ii) to the extent that any Loan Party shall have paid any amounts to the Canadian Agent under its Foreign Parallel Debt or the Canadian Agent shall have otherwise received monies in payment of such Foreign Parallel Debt, the Foreign Principal Obligations ...
Foreign Parallel Debt. In this Section 11.1 “Foreign Corresponding Debt” means the Obligations of a Loan Party other than the Parent Borrower or any Loan Party that is not a Foreign Subsidiary, in each case, under or in connection with the Loan Documents. “Foreign Parallel Debt” means any amount which a Loan Party other than the Parent Borrower or any Loan Party that is not a Foreign Subsidiary, in each case, owes to the Administrative Agent under this Section 11.1.