On the other hand, the applicant banks argued that the facility contract clearly distinguished the different capacities and roles of the facility agent, the security officer, the lender of collateral and the lender, even though BLB fulfilled all those roles at the time of the conclusion of the contract. The plaintiff banks also stated that the interpretation of paragraph 9.7(a) of BLB would include BLB as a lender and that BLB as such would take precedence over other lenders with respect to its fees and expenses as a lender, which was inconsistent with the other sub-clauses of clause 9.7. This example has been simplified to show the mechanics of a cascading payment system. In fact, some waterfall systems are structured so that minimum interest payments are made at all levels during each payment cycle. After entering into several separate hedging arrangements to manage its swap commitment, BLB attempted to argue that the “Hedging Break Costs” in clause 9.7(a) would cover their costs and expenses related to the restructuring or rebalancing of those swap agreements in the event of early termination of the borrowers` hedging arrangements. BLB also argued that after the penultimate sentence of clause 9.7, the repayment of those fees and charges would be before the principal and interest paid to the lenders under the facility agreement. Justice Flaux rejected the proposal that a facility agent could never be held liable for break fees under a coverage agreement. In any case, in long commercial contracts, there have often been words or phrases that are superfluous or have no obvious meaning. While the court will attempt to avoid an interpretation that could render an entire clause meaningless or ineffective, it will recognize the clear and obvious meaning of a clause despite the inclusion of conditional or superfluous language. At the heart of BLB`s argument was the argument that it was economically reasonable and reasonable for all amounts paid by borrowers or guarantors to take precedence over other lenders to their advantage over other lenders and for BLB to take those amounts in accordance with the penultimate sentence of clause 9.7. As with all legal documents, the devil is in the details when it comes to important considerations that an investor must take before accepting a stunt. In particular, while the structure of the waterfall is easy to spot, a much more nuanced approach is taken when it comes to defining metrics.
By way of illustration, “return on invested capital” can be defined as the total capital contributed, the capital contributed to the investments made, or as the total capital contributed to the investments, capital expenditures and operating costs, each definition having a significant impact on the result of the calculation. Please contact Parker McCay`s corporate department to discuss specific considerations to take before accepting a cascading determination. In a decision perhaps not surprisingly, Justice Flaux advocated the construction of cascading determination by the plaintiff banks. It is apparent from the recitals in the preamble to the installation agreement that BLB`s different capacities are so clearly distinguished that the term `installation agent` refers to BLB in that respect and not BLB in another respect. Cascading provisions can often be contentious issues for unions, especially in situations where a default has occurred and the credit transaction involves hedging agreements. .