The Forbearance Agreement Commercial Loan is a critical document used in Indian banking and finance practice when a borrower faces difficulties in meeting their loan obligations but demonstrates potential for recovery. This document becomes relevant when a borrower defaults or anticipates defaulting on their commercial loan obligations, but the lender believes that providing temporary relief is more beneficial than immediate enforcement. The agreement, governed by Indian law and regulated by the Reserve Bank of India's guidelines, details the terms of forbearance, including the forbearance period, modified payment terms, additional security requirements, and ongoing obligations of the borrower. It serves as a bridge arrangement that helps businesses navigate temporary financial difficulties while providing lenders with additional safeguards and maintaining their enforcement rights. The document must comply with Indian banking regulations, contract law, and debt recovery legislation, making it a complex but essential tool in commercial lending relationships.
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1. Parties: Identification of the lender, borrower, and any guarantors or security providers
2. Background: Recitals describing the original loan agreement, current default status, and borrower's request for forbearance
3. Definitions: Definitions of key terms including Forbearance Period, Existing Events of Default, and other relevant terms
4. Acknowledgment of Debt: Borrower's confirmation of outstanding amounts and existing defaults
5. Forbearance Terms: Specific terms of the forbearance including duration, conditions, and any modified payment terms
6. Conditions Precedent: Conditions that must be satisfied before the forbearance becomes effective
7. Borrower's Covenants: Ongoing obligations of the borrower during the forbearance period
8. Representations and Warranties: Updated representations and warranties from the borrower
9. Events of Default: Additional or modified events of default specific to the forbearance agreement
10. Rights and Remedies: Lender's rights upon termination of forbearance or new default
11. Reservation of Rights: Preservation of lender's rights under original loan documents
12. Fee and Expenses: Any fees or costs associated with the forbearance
13. Governing Law and Jurisdiction: Specification of Indian law and relevant jurisdiction
14. Execution: Signature blocks and execution formalities
1. Additional Security: Include when new security or guarantees are being provided as part of forbearance
2. Interest Rate Modifications: Include when forbearance includes changes to interest rates or interest calculations
3. Restructuring Plan: Include when forbearance is part of a larger restructuring strategy
4. Reporting Requirements: Include when additional reporting obligations are imposed during forbearance period
5. Third Party Consents: Include when consents from other creditors or stakeholders are required
6. Release Provisions: Include when mutual releases are part of the forbearance arrangement
7. Step-In Rights: Include when lender requires additional control rights during forbearance
1. Schedule 1 - Existing Facility Details: Details of original loan agreement and amendments
2. Schedule 2 - Outstanding Amounts: Detailed breakdown of current outstanding debt
3. Schedule 3 - Existing Events of Default: List of all existing defaults under the original facility
4. Schedule 4 - Modified Payment Schedule: New payment terms during forbearance period
5. Schedule 5 - Additional Security Details: Details of any new security or guarantees
6. Appendix A - Form of Compliance Certificate: Template for periodic compliance reporting
7. Appendix B - Required Consents: List of required third-party consents and their status
Relevant legal definitions
Acceleration
Additional Security
Applicable Law
Authorized Officer
Business Day
Compliance Certificate
Conditions Precedent
Default Interest
Default Notice
Effective Date
Event of Default
Existing Events of Default
Existing Facility Agreement
Existing Security
Facility
Finance Documents
Forbearance Conditions
Forbearance Fee
Forbearance Period
Forbearance Termination Event
Guaranteed Obligations
Implementation Date
Interest Payment Date
Material Adverse Effect
Modified Payment Schedule
Outstanding Amount
Permitted Payments
Potential Event of Default
Recovery Expenses
Regulatory Authority
Relevant Documents
Remedial Plan
Restructuring Plan
Security Documents
Specified Defaults
Standstill Period
Termination Date
Transaction Documents
Validity Period
Additional Security
Applicable Law
Authorized Officer
Business Day
Compliance Certificate
Conditions Precedent
Default Interest
Default Notice
Effective Date
Event of Default
Existing Events of Default
Existing Facility Agreement
Existing Security
Facility
Finance Documents
Forbearance Conditions
Forbearance Fee
Forbearance Period
Forbearance Termination Event
Guaranteed Obligations
Implementation Date
Interest Payment Date
Material Adverse Effect
Modified Payment Schedule
Outstanding Amount
Permitted Payments
Potential Event of Default
Recovery Expenses
Regulatory Authority
Relevant Documents
Remedial Plan
Restructuring Plan
Security Documents
Specified Defaults
Standstill Period
Termination Date
Transaction Documents
Validity Period
Clauses
Acknowledgment of Debt
Amendment
Assignment
Conditions Precedent
Confidentiality
Costs and Expenses
Default
Enforcement
Entire Agreement
Events of Default
Further Assurance
Governing Law
Indemnification
Interest
Jurisdiction
Notices
Payment Terms
Preservation of Rights
Representations and Warranties
Reservation of Rights
Security
Severability
Standstill
Survival
Termination
Third Party Rights
Undertakings
Waiver
Amendment
Assignment
Conditions Precedent
Confidentiality
Costs and Expenses
Default
Enforcement
Entire Agreement
Events of Default
Further Assurance
Governing Law
Indemnification
Interest
Jurisdiction
Notices
Payment Terms
Preservation of Rights
Representations and Warranties
Reservation of Rights
Security
Severability
Standstill
Survival
Termination
Third Party Rights
Undertakings
Waiver
Relevant Industries
Manufacturing
Real Estate
Infrastructure
Healthcare
Hospitality
Retail
Agriculture
Information Technology
Transportation
Energy
Mining
Telecommunications
Construction
Automotive
Steel and Metal Processing
Relevant Teams
Legal
Finance
Corporate Banking
Risk Management
Compliance
Treasury
Credit Administration
Loan Recovery
Corporate Secretarial
Business Development
Portfolio Management
Relevant Roles
Chief Financial Officer
Finance Director
Corporate Lawyer
Legal Counsel
Banking Relationship Manager
Credit Risk Manager
Restructuring Officer
Treasury Manager
Compliance Officer
Company Secretary
Risk Assessment Manager
Corporate Banking Head
Debt Restructuring Specialist
Recovery Manager
Portfolio Manager
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