Sacred rights

Terms in credit documents protected by specified heightened consent requirements for amendments. Depending on the agreement, changes may require consent from every affected lender or from all lenders. The protected matters and exceptions depend on the drafting.

Sacred rights in round numbers

Hypothetical: a loan has 100 lenders, and a proposed amendment affects 40 of them. Assume the agreement requires each affected lender’s consent for that amendment. All 40 must consent; all 100 are needed only if all are affected or the agreement requires every lender’s consent. Lender headcount alone does not establish the agreement’s ordinary voting threshold.

Reference

A contractual example: In re TPC Group, July 26, 2022 opinion, discusses different consent levels under the particular indenture. It does not establish a universal voting threshold.

Uptier exchange · Drop-down financing · Covenant · Senior debt · All of the glossary