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Debtor-Creditor Relations
Keywords and Phrases
65
Law
Professional
06/16/2013

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Term
syndicated loan
Definition
When two or more lenders, usually banks, make a loan to a borrower together. The lenders enter into concurrent direct obligations with the borrower to make a loan, typically on a pro rata basis. The loan is coordinated by a lead lender that serves as an agent for all of the lenders in disbursing the funds, collecting payments of interest and principal, and administering and enforcing the loan.
Term
participating loan
Definition
A loan in which the original lender sells shares to other parties, called participants. Each participant acquires an undivided interest in the loan.
Term
term sheet
Definition
A letter outlining the terms and conditions on which the lender will lend.
Term
loan agreement
Definition
Contains the lender's promise to lend a specified amount, describes the mechanics by which funds will be disbursed, the rate of interest to be charged, the manner of computing such interest, and the repayment terms.
Term
floating interest rate
Definition
an interest rate that fluctuates throughout the life of the loan according to the interest rate the lender would pay if it borrowed the funds in order to relend them.
Term
prime rate
Definition
The lowest published rate of interest at which the bank lends to its best and most creditworthy commercial customers.
Term
base rate
Definition
Term
reference rate
Definition
Term
spread
Definition
the margin added to the theoretical cost that a bank incurs to obtain, for a given period of time, the funds it will lend.
Term
London Interbank Offered Rate (LIBOR)
Definition
The interest rate based on the cost of borrowing offshore U.S. Dollars in the global interbank market, which today is centered in several locations in addition to London and is published in the business sections of all major daily newspapers.
Term
certificate of deposit (CD) rate
Definition
An interest rate based on the average of the bid rates quoted to the bank by dealers in the secondary market for the purchase at face value of the bank's CDs in a given amount and for a given term.
Term
365/360 method
Definition
A method of computing interest on a daily basis in which the nominal annual interest rate is divided by 360, and the resulting daily rate is then multiplied by the outstanding principal amount and the actual number of days in the payment period.
Term
365/365 method
Definition
A method of computing the interest on the daily basis in which the nominal annual interest rate is divided by 365 and then multiplied by the outstanding principal amount and the actual number of days of the payment period.
Term
360/360 method
Definition
A method of computing interest on a daily basis in which it is assumed that all months have thirty days, and thus the monthly interest amounts are always the same.
Term
revolving loan
Definition
A line of credit that may be advanced and repaid from time to time at the borrower's discretion, subject to a final maturity date when all sums outstanding become due and payable.
Term
term loan
Definition
A loan in which any advanced amounts may not be re-borrowed. The lender may require the entire loan to be repaid in one lump sum upon maturity, in which case the borrower only pays interest on the loan prior to maturity, or in equal or unequal installments of principal and interest.
Term
Asset-Based Loan
Definition
A loan in which the amount lent is determined according to the levels of assets available from time to time as security for the loan.
Term
condition precedent
Definition
In a loan agreement, conditions that must be met before the lender's obligations arise under the agreement.
Term
covenants
Definition
Borrower's promises that it will or will not take specific actions as long as either a commitment of a loan is outstanding.
Term
affirmative covenants
Definition
State the actions that a borrower will take, for example, maintain its corporate existence, pay taxes, maintain insurance, and comply with applicable laws.
Term
negative covenants
Definition
State the actions that the borrower cannot take; for example the borrower cannot incur additional debt beyond a specified amount and cannot grant liens other than those specifically enumerated or arising in the ordinary course of business.
Term
liens
Definition
a claim on property that secures a debt owed by the owner of the property.
Term
events of default
Definition
In a loan agreement, the list of events that will trigger the lender's right to terminate (or "call") the loan, accelerate the repayment obligations, and if the loan is secured, take possession of the property securing the loan.
Term
cross-default provision
Definition
Provides that any breach by the borrower under any other loan agreement constitutes an event of default.
Term
waives
Definition
When a lender relinquishes its right to call a loan based on a default.
Term
forbears
Definition
When a lender decides not to exercise any of its remedies for the forbearance period.
Term
commercial paper
Definition
short-term corporate indebtedness.
Term
maturity date
Definition
The specified date when a loan must be repaid.
Term
amortized
Definition
paid off over time.
Term
revolving line of credit
Definition
the borrower can borrow the amount it requires up to a specified maximum and may re-borrow amounts it has repaid.
Term
commitment fee
Definition
A fee that a lender requires as consideration for its promise to keep the commitment available since it receives no interest on amounts not borrowed.
Term
secured loan
Definition
A loan backed by collateral.
Term
foreclose
Definition
Take constructive or actual possession of collateral for a loan.
Term
antideficiency laws
Definition
When a lender seeking remedies against real property security it may be restricted from suing the borrower personally.
Term
one-form-of action laws
Definition
Term
secured transactions
Definition
Loans or other transactions secured by the borrower's collateral.
Term
right of setoff
Definition
permits one party to automatically deduct amounts owed to it by the other party from the payments the first party makes to the second party.
Term
security interest
Definition
Under Article 9 of the UCC, any interest in personal property or fixtures used as collateral to secure payment or the performance of an obligation.
Term
debtor
Definition
Under Article 9 of the UCC, the person who owes payment of other performance of the obligation secured, whether or not that person owed or has rights in the collateral.
Term
secured party
Definition
Under Article 9 of the UCC, the lender, seller, or other person in whose favor there is a security interest.
Term
security agreement
Definition
an agreement that creates or provides for a security interest.
Term
attached
Definition
When all the formal requirements to create an enforceable security interest have been met.
Term
perfecting
Definition
make a security interest valid as against other creditors of the debtor.
Term
pledge
Definition
a security interest that is a possessory interest.
Term
after-acquired property
Definition
property that the debtor acquires after it signs the security agreement.
Term
floating lien
Definition
a security interest in the proceeds if the collateral is sold, exchanged, collected, or otherwise disposed of.
Term
cross-collateralization
Definition
collateral for one loan may be used to secure obligations under another loan.
Term
dragnet clause
Definition
a clause in a security agreement that states that collateral for one loan my be used to secure obligations under another loan.
Term
UCC-1 forms
Definition
A form that is filed to perfect a security interest.
Term
purchase money security interest
Definition
a security interest when the seller of consumer goods lends the buyer the money with which to buy them and is automatically perfected.
Term
finance lease
Definition
Term
guaranty
Definition
an undertaking by one person, the guarantor, to become liable for the obligation of another person, the primary debtor.
Term
guaranty of performance
Definition
a guaranty in which specific nonpayment obligations will be performed.
Term
guaranty of payment
Definition
the guarantor's obligation to pay the lender is triggered, immediately and automatically, when the primary debtor fails to make a payment when due.
Term
guaranty of collection
Definition
the guarantor becomes obliged to pay only after the lender has attempted unsuccessfully to collect the amount due from the primary debtor.
Term
limited guaranty
Definition
the maximum amount of the guarantor's liability is expressly stated in the guaranty instrument.
Term
restricted guaranty
Definition
a guarantee that is enforceable only with respect to a specified transaction or series of transactions.
Term
continuing guaranty
Definition
A guaranty that covers all future obligations of the primary debtor to the lender.
Term
fraudulent conveyance
Definition
Term
upstream guaranty
Definition
subsidiaries guarantee, or pledge their assets as security for the parent's debt.
Term
leveraged buyout
Definition
When the acquisition of a company is financed largely through debt.
Term
debt subordination
Definition
an agreement whereby one or more creditors of a common debtor agree to defer payment of their claims until another creditor of the same debtor is fully paid.
Term
junior debt
Definition
Indebtedness that is subordinated under an agreement.
Term
lien subordination
Definition
an agreement between two secured creditors whose respective security interests, liens, or mortgages attach to the same property and in which the subordinating party agrees that the lien of the other creditor will have priority notwithstanding the relative priorities that the parties' liens would otherwise have under applicable law.
Term
equitable subordination
Definition
A doctrine developed in bankruptcy law to prevent one creditor, through fraud or other wrongful conduct, from increasing its recovery at the expense of other creditors of the same debtor.
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