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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Tuesday, June 25, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will explore the evolution of erroneous payment provisions in credit agreements as a result of the infamous Revlon case. The panel will review provisions developed by market participants, including language advanced by the Loan Syndication and Trading Association (LSTA), and discuss how parties may wish to fine-tune their erroneous payment provisions depending on the circumstances of the loan arrangement.

Faculty

Leah Edelboim
Partner
Cadwalader Wickersham & Taft LLP, London

Ms. Edelboim has more than a decade of experience in fund finance transactions, having worked on some of the largest deals with the biggest syndicates. She advises banks and other financial institutions on syndicated, club and bilateral subscription credit facilities, as well as NAV facilities, hybrids, management fee lines, GP Financings, Capital Relief Trades and other, often bespoke, fund finance transactions. With significant experience in both borrower- and lender-side representations, Ms. Edelboim has often been called upon to help clients devise creative structures that reflect evolving regulatory requirements and investor trends. She also has deep experience advising ratings agencies and providers of financial guaranty and other insurance products in fund finance transactions. Ms. Edelboim’s industry leadership is reflected in her frequent role as faculty member, panelist, speaker and author on cutting-edge fund finance issues.

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Michael A. Johnson
Attorney
Cadwalader Wickersham & Taft LLP, London

Mr. Johnson advises banks and other financial institutions in negotiating and documenting subscription credit facilities, NAV facilities, hybrid facilities and management fee lines for private equity funds across many industry verticals. He is a rising leader in the fund finance space and frequently delivers trainings on fund finance to clients and their in-house legal teams. Mr. Johnson also publishes in Cadwalader’s weekly newsletter, Fund Finance Friday. 

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Description

Even though the Second Circuit restored a sense of normalcy to the syndicated loan market by ordering the lenders to return mistaken payments to Citibank in the infamous Revlon case, the erroneous payment provision (or Revlon blocker as it has become commonly known) is here to stay.

Although the Revlon case had no direct bearing outside of the jurisdiction of New York, the case served as a wake-up call for the entire loan market. Prior to the decision, no financial institution expected that it could permanently lose billions of dollars simply by entering mistaken wire instructions. Since the Revlon decision, erroneous payment provisions have been developed by industry groups such as the LSTA and by individualized lending institutions. These provisions are now included in credit agreements and are intended to protect administrative agents against potential liabilities from any payments made in error.

While it is rare for an erroneous payment provision to be rejected by the borrower or any lender entirely, the contours of these provisions may be negotiated and counsel for lenders and borrowers should review these terms carefully to ensure that they do not overreach. For instance, accrual of interest on erroneous payments may be resisted, the language relating to preservation of a borrower's obligation to pay in an erroneous payment scenario may be scaled back or removed entirely, or the deadline for the administrative agent to notify lenders of an erroneous payment could be required.

Listen as our authoritative panel discusses the background and consequences of the Revlon case and its lasting impact on credit agreements. The panel will review common features of erroneous payment provisions and things to look out for whether your client is a borrower, lender, or administrative agent.

Outline

  1. Overview of erroneous payment provisions
  2. Implications of the Revlon case
  3. Common features of current erroneous payment provisions
    1. LSTA's model erroneous payment provision
    2. Example provisions developed by individual lending institutions
  4. Other provisions of a typical credit agreement implicated by Revlon
    1. Pro rata sharing of payments
    2. Indemnification
    3. Subrogation
    4. Ability to sell loans
  5. Considerations for borrowers, lenders, and administrative agents when negotiating erroneous payment provisions
  6. Key takeaways

Benefits

The panel will address these and other key issues:

  • How did Revlon change the standard erroneous payment provisions in credit agreements?
  • What are common features of erroneous payment provisions?
  • What are the key considerations for borrowers, lenders, and administrative agents when negotiating erroneous payment provisions?
  • What other provisions in credit agreements were implicated by the Revlon case?