By using the updated LMA Standard Terms and Conditions, parties to LMA trades acknowledge that the terms of their bank debt trade may be altered by a European governmental body exercising such power. This agreed-upon contractual language may bind counterparties not otherwise subject to European bail-in rules whereby any obligation owed to a counterparty may be reduced or canceled under an open or settled trade. Beginning on January 1, 2021, all LMA par and distressed bank debt trades will expressly incorporate the updated language in the LMA Standard Terms and Conditions, and such terms will automatically be incorporated by reference into the other related transaction documents necessary to close the trade (such as the pricing letter and form of purchase agreement). At this time, the updated European bail-in rules are not included in certain other LMA trade documents (such as multilateral netting agreements, termination and transfer agreements, and bilateral netting agreements). The LMA plans to update these form documents in the near future.
Should you have any questions, please do not hesitate to contact us at Alston & Bird.