Forbearance Agreement Loan for Ireland

Forbearance Agreement Loan Template for Ireland

A Forbearance Agreement Loan document under Irish law is a formal agreement between a lender and borrower that modifies the terms of an existing loan agreement when the borrower is experiencing financial difficulties. The document outlines the temporary or permanent modifications to the original loan terms, including revised payment schedules, interest rates, or other concessions granted by the lender. It must comply with Irish financial regulations, particularly those set by the Central Bank of Ireland, and includes mandatory consumer protection provisions where applicable. The agreement details the conditions for maintaining the forbearance arrangement and the consequences of default.

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What is a Forbearance Agreement Loan?

The Forbearance Agreement Loan is a crucial document in Irish lending practice, typically employed when borrowers face genuine financial hardship and require modifications to their existing loan terms. This document type has gained particular significance following financial crises and economic challenges, where both institutional and individual borrowers may need payment relief or loan restructuring. The agreement must carefully balance the lender's risk management requirements with borrower protection measures mandated by Irish law and Central Bank regulations. It includes detailed terms about the nature of the forbearance (such as payment holidays, interest rate adjustments, or term extensions), conditions for maintaining the arrangement, and consequences of default. The document is essential for compliance with Irish regulatory requirements, including the Code of Conduct on Mortgage Arrears and Consumer Protection Code where applicable, and serves as a legally binding modification to the original loan agreement.

What sections should be included in a Forbearance Agreement Loan?

1. Parties: Identification of the lender and borrower(s), including full legal names and addresses

2. Background: Recitals detailing the original loan agreement, current status, and reason for forbearance

3. Definitions: Definitions of key terms used throughout the agreement, including references to the original loan agreement

4. Acknowledgment of Debt: Confirmation of the current outstanding amount and acknowledgment of the existing defaults

5. Forbearance Terms: Details of the modified payment terms, including payment amounts, schedule, and duration of the forbearance period

6. Conditions Precedent: Conditions that must be satisfied before the forbearance arrangement becomes effective

7. Borrower's Representations and Warranties: Current financial status declarations and confirmation of information accuracy

8. Continuing Obligations: Ongoing requirements the borrower must meet during the forbearance period

9. Default Provisions: Circumstances that would terminate the forbearance arrangement and consequences of breach

10. Reservation of Rights: Lender's preservation of rights under the original loan agreement

11. Governing Law and Jurisdiction: Confirmation of Irish law governance and jurisdiction

What sections are optional to include in a Forbearance Agreement Loan?

1. Additional Security: Include when new security is being provided as part of the forbearance arrangement

2. Guarantor Provisions: Required when the original loan has guarantors who need to consent to the forbearance

3. Insurance Requirements: Include when specific insurance obligations are part of the forbearance conditions

4. Financial Covenants: Add for commercial loans where ongoing financial performance metrics need to be maintained

5. Reporting Requirements: Include for cases requiring regular financial or operational reporting

6. Release Provisions: Include when certain obligations or parties are being released as part of the arrangement

7. Tax Provisions: Required when there are specific tax implications that need to be addressed

8. Fees and Costs: Include when there are specific fees or costs associated with the forbearance arrangement

What schedules should be included in a Forbearance Agreement Loan?

1. Schedule 1 - Original Loan Details: Summary of the original loan agreement terms and amendments to date

2. Schedule 2 - Modified Payment Schedule: Detailed schedule of revised payment amounts and dates

3. Schedule 3 - Current Debt Statement: Breakdown of current outstanding principal, interest, and any fees or charges

4. Schedule 4 - Conditions Precedent Documents: List of documents and conditions required before effectiveness

5. Schedule 5 - Required Forms: Standard forms required by Irish regulatory requirements

6. Appendix A - Compliance Certificate: Template for ongoing compliance certification if required

7. Appendix B - Notice Requirements: Mandatory warnings and notices required under Irish consumer protection laws

8. Appendix C - Direct Debit Mandate: New payment instructions and authorizations if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Ireland

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

Real Estate and Property

Commercial Lending

Retail Banking

Agricultural Finance

Corporate Finance

Asset Finance

Construction and Development

Manufacturing

Small and Medium Enterprises (SMEs)

Relevant Teams

Legal

Credit Risk

Compliance

Loan Operations

Corporate Banking

Retail Banking

Special Assets

Collections and Recovery

Risk Management

Financial Control

Regulatory Affairs

Customer Relations

Relevant Roles

Credit Manager

Loan Officer

Risk Manager

Compliance Officer

Legal Counsel

Debt Restructuring Specialist

Collections Manager

Relationship Manager

Credit Risk Analyst

Financial Controller

Managing Director

Chief Financial Officer

Corporate Banking Manager

Retail Banking Manager

Regulatory Compliance Manager

Recovery and Restructuring Manager

Industries
Consumer Credit Act 1995: Primary legislation governing consumer credit agreements in Ireland, including requirements for credit agreements, disclosure obligations, and consumer protections
Central Bank Act 1942 (as amended): Establishes regulatory framework for financial institutions and their conduct, including requirements for forbearance arrangements
Central Bank (Supervision and Enforcement) Act 2013: Provides for enhanced supervisory and enforcement powers of the Central Bank, affecting how financial institutions handle loan modifications
Code of Conduct on Mortgage Arrears (CCMA): Central Bank regulation providing framework for handling mortgage arrears cases, including forbearance options
Consumer Protection Code 2012: Sets out general principles for financial institutions dealing with consumers, including requirements for fair treatment and transparency
European Union (Consumer Mortgage Credit Agreements) Regulations 2016: Implements EU Mortgage Credit Directive, setting standards for mortgage lending and consumer protection
Personal Insolvency Act 2012: Provides framework for personal insolvency arrangements, which may influence forbearance terms
Civil Law (Miscellaneous Provisions) Act 2011: Contains provisions affecting enforcement of credit agreements and security interests
Data Protection Act 2018: Implements GDPR in Ireland, governing how personal and financial information must be handled in credit agreements
European Communities (Unfair Terms in Consumer Contracts) Regulations 1995: Protects consumers against unfair terms in contracts, including loan agreements and forbearance arrangements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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