The following Banking & Finance Q&A Produced in partnership with Ian Higgins of 3 Verulam Buildings (3VB) provides comprehensive and up to date legal information covering:
The remedies available to a lender will depend principally on:
when the misstatement was made (ie before or after the contract was entered into, and before and after drawdown; and
what specific provision is made for such a misstatement in the loan documentation
The loan documentation may specify the statements which the borrower is taken to have made on contract, and is often deemed to restate those statements on important dates such as the dates of drawdowns. If the statement is no longer true, depending on the terms of the contract, it may be possible to treat the untruth as an Event of Default. Again depending on the terms of the contract, this may have the effect of, for example:
cancelling any further commitment to make drawdowns
accelerating the existing debt
triggering cross-default provisions
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