Market Trends 2018/19: Defaulting Lender and "Yank-a-Bank" Provisions

Summary

This practice note discusses market trends for defaulting lender and "yank-a-bank" provisions in certain publicly filed credit agreements dated between 2018 and 2019. Defaulting lender provisions allow for the removal of lenders under certain circumstances, such as a failure of lenders to fund their loans, insolvency of lenders, refusal of lenders to agree to amendments under certain circumstances, or upon the occurrence of the "bail-in" of a lender under European Union law. This note describes all of these prongs of the defaulting lender definition and the circumstances under which a borrower can replace an existing lender (the yank-a-bank concept). The examples demonstrate how these provisions are used in the credit agreement.