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Termination Of Agreement During Moratorium

In addition, “local” bank credit agreements generally provide for certain termination rights in the event of substantial adverse changes, which generally relate to circumstances related to the borrower`s ability to comply with the credit agreement or its ability to repay the debt. Similarly, the General Terms and Conditions of Sale (GTC) of Slovak banks usually contain clauses aimed at aggravating the condition of a borrower or a group of borrowers. This, together with the above exclusions, shows that the moratorium must be used by companies facing temporary financial difficulties that have a real chance of recovering. In a way, it is a “restructuring” rather than an insolvency regime. As part of the widget delivery agreement, Globex may terminate if Widgets Ltd becomes insolvent. The decisions require banks to define appropriate measures, including a moratorium, to help their customers establish a sustainable business model and meet credit obligations. Borrowers are entitled to a moratorium on the duration of the state of emergency declared due to the pandemic and up to 6 months in combination with other measures, starting with the approval of the bank. The economic terms of a loan can in principle only be changed with the agreement of both parties or by a court. The right to unilaterally modify the terms of the agreement may be defined to a very limited extent in the agreement; However, before exercising this right, further legal review is recommended. In this sense, the agreement must indicate reasons that would allow a party to unilaterally modify the terms of the agreement, while the obligations of each of the parties must remain identifiable. .

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