ISDA Master Agreement: High Court interprets Section 2(a)(iii)

Introduction

For all of the legal difficulties which market participants are facing in light of the insolvency of Lehman Brothers, the insolvency is providing the Courts with the opportunity to pass judgment on many of the tricky provisions of the 1992 and 2002 versions of the ISDA Master Agreement (together the "Agreements").

Filed under:
United Kingdom, Derivatives, Insolvency & Restructuring, Litigation, Reed Smith LLP, Contractual term, Condition precedent, Statutory interpretation, Concession (contract), Default (finance), International Swaps and Derivatives Association, Lehman Brothers
Authors:
Paul M. Dillon , Nicholas Horsfield
Location:
United Kingdom
Firm:
Reed Smith LLP
Section 2(a)(iii) of the ISDA Master Agreement, similar clauses and insolvency

There have been so many articles written and opinions expressed on the spate of cases on the effect of how netting provisions in over-the-counter ("OTC") derivative contracts work when a counterparty becomes in default, that you would be forgiven for being confused about the current position. Now that the dust has settled (for the time being at least), this article takes stock and seeks to make matters as straightforward as possible.

Filed under:
United Kingdom, USA, Derivatives, Insolvency & Restructuring, Reed Smith LLP, Bankruptcy, Collateral (finance), Over-the-counter (finance), Debt, Foreclosure, Default (finance), Lehman Brothers
Authors:
Siân C. Fellows , Paul M. Dillon
Location:
United Kingdom, USA
Firm:
Reed Smith LLP