Solvency Certificate (Pro-Borrower)


Summary

This form is a solvency certificate form used by the borrower group to satisfy a condition precedent of a loan transaction. This form includes practical guidance, drafting notes, alternate clauses, and optional clauses.A solvency certificate gives comfort to lenders that the transaction will not be voided as a fraudulent transfer or conveyance in a bankruptcy of the borrower. This form assumes a borrower with subsidiaries. The certifications in this solvency certificate are set up to be given with respect to the borrower and its subsidiaries on a consolidated basis. However, in some transactions, the loan parties (i.e., the group of borrower entities that will be providing credit support for the loans in the form of guarantees and collateral security) may also include a parent entity of the borrower or, in some cases, the subsidiaries providing credit support may be limited to a “restricted subsidiaries” subgroup only. In those instances, the solvency certificate may be modified to ...