Workout or Restructuring Clause Samples
The "Workout or Restructuring" clause outlines the procedures and options available to parties when a borrower is unable to meet its financial obligations under an agreement. Typically, this clause allows the lender and borrower to negotiate revised terms, such as extending payment deadlines, reducing interest rates, or altering repayment schedules, to help the borrower regain financial stability. Its core practical function is to provide a structured framework for resolving financial distress without resorting to immediate default or litigation, thereby offering both parties a chance to avoid more severe consequences.
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Workout or Restructuring. Equity Securities or other securities may be received by the Issuer at any time in exchange for a Collateral Obligation or a portion thereof in connection with an insolvency, bankruptcy, reorganization, restructuring or workout of a Collateral Obligation. In addition, at any time, the Collateral Manager may, subject to certain conditions, direct the Trustee to apply Interest Proceeds, Principal Proceeds or amounts designated for a Permitted Use to make any payments required to acquire loan assets (including DIP Collateral Obligations) or securities in connection with an insolvency, bankruptcy, reorganization, restructuring or workout of a Collateral Obligation or exercise an option, warrant, right of conversion or similar right in connection with an insolvency, bankruptcy, reorganization, restructuring or workout of a Collateral Obligation, it being understood that any Received Obligation that is a Loan and satisfies the definition of “Collateral Obligation” (without giving effect to any carve-outs therein (if any)) will constitute a “Collateral Obligation” for all purposes under this Indenture, any Received Obligation that is a Loan and satisfies the definition of “Collateral Obligation” (solely due to the effect of any carve-outs therein) will constitute a “Defaulted Obligation” for all purposes under the Indenture, and any Received Obligation that either is not a Loan or does not satisfy the definition of “Collateral Obligation” will constitute an “Equity Security” for all purposes under this Indenture; provided, that (i) after the end of the Reinvestment Period, Principal Proceeds may not be used to acquire a Received Obligation, (ii) the aggregate amount of Principal Proceeds used to purchase Received Obligations (x) in any calendar year shall not exceed 1.5% of the Collateral Principal Amount (determined as of the first day of such year) and (y) shall not exceed 5% of the Collateral Principal Amount in the aggregate since the Closing Date, (iii) Principal Proceeds shall not be used to purchase Received Obligations unless the Overcollateralization Ratio Test with respect to the most Junior Class of Secured Notes Outstanding is satisfied, (iv) any proceeds received from or in connection with a Received Obligation purchased using Principal Proceeds and that did not satisfy the Investment Criteria when acquired will be treated as Principal Proceeds until the amount of such proceeds exceed the sum of (x) the Principal Balance of the related Exchanged Obli...