On January 1, 2019, Financial Accounting Standards Board (“FASB”) guidelines come into effect that will present public-company borrowers with changes to the treatment of leasing transactions under US Generally Accepted Accounting Principles (“GAAP”)—changes that could extraordinarily affect their balance sheets. Similar changes for private companies will go into effect January 1, 2020. This Legal Update discusses the new guidelines' impact on loan documentation and existing credit agreements, potential borrower-friendly “loopholes” and considerations related to “GAAP-freezing” provisions.
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