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Sep 11

Amended And Restated Company Agreement

While one may question the relevance of the evidence presented by the District Court to indicate that the parties may have intended to obtain a novation, the lesson that a lawyer preparing an amended and adapted funding agreement should draw from that decision is the importance of clearly explaining the parties` intention that the amended and adapted agreement does not constitute a novation. The Tribunal d`In re Fair Finance Company stated that the 2004 agreement was not expressly provided for, that the intention of the parties was that the original guarantee rights should continue.9 When drawing up an amended and adapted financing agreement, a lawyer should include an explicit statement that the agreement is not intended for novation or termination of the obligations arising from the original agreement. and, in the context of secured financing, that the guarantees created under the original agreement are intended to continue and guarantee the obligations arising from the amended and adapted agreement. A single modified and adapted agreement is often easier to read than the original agreement and a separate amendment (or a series of separate amendments). For financing transactions, the parties generally use modified and adapted credit agreements. When doing so for secured financing, the parties almost always intend that the immovable property that secured the original credit agreement continues to meet the obligations arising from the amended and adapted credit agreement, and as a recent case shows, it is important for the parties to ensure that the document clearly states that it is not intended to novation of the obligations arising from the original credit agreement. Recently, in Bash v. Textron Financial Corporation (In re Fair Finance Company)1, a decision of the District Court for the Northern District of Ohio that an amended and adapted loan agreement did not constitute a novation of the original loan agreement. The District Court found that, by largely reversing the rejection of adversarial proceedings resulting from insolvency proceedings under Chapter 7, the District Court held that the amended and adapted loan agreement did indeed constitute a novation of the original loan agreement (or at least that it was not clear whether it constituted it). .