Credit agreements typically contain express cure periods before certain types of breaches—such as delivery of financial statements, compliance with certain affirmative covenants and payment of interest—result in events of default that allow lenders to exercise remedies. Additionally, many credit agreements include an “equity cure” provision that allows borrowers to cure financial covenant defaults. But in the absence of an express cure period or right, many practitioners believe that a default can nonetheless be cured. This Legal Update discusses the debate between borrowers and lenders regarding whether events of default can be cured in the absence of (or after the lapse of) an express cure period.
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