Enforcement and default
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What is the definition of enforcement?
- The action of asserting the rights of DCMS and compelling you to comply with a loan agreement obligation or taking action under the loan or security.
- The main obligations required of you under the terms of the SSP agreements are:
- Repayments – make the required DCMS payments of interest and principal in line with your agreed schedule.
- Monitoring and reporting – submit the required information on time and in full by agreed deadlines, and provide any additional information reasonably requested to enable the effective risk management of DCMS debt.
- Consents – proactively seek DCMS consent for all required matters – including but not limited to:
- Change of ownership/control
- Debt for equity
- Share issues
- Additional borrowing/creating security
- Joint ventures
- Changes to company structure
- Use of windfall
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What enforcement action may be taken and why?
- Failure to meet the repayment, monitoring and reporting, and consent obligations are events of default under the terms of the loan agreement. DCMS have options available to them to resolve the default and to protect their financial position.
- Although some events of default relate to other triggers, such as insolvency, many of the events of default are informed by your behaviour and the impact this has on DCMS financial recovery and security.
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Options include but are not limited to:
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Apply standard default interest until the default is resolved.
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Apply a one-off default payment to compensate DCMS for the default.
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Apply an increased interest rate to apply for the remaining life of the loan.
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Accelerated repayment – bring forward the date at which the total loan must be settled.
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Increase DCMS security for the loan.
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Demand full or partial repayment.
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Enforce the security and/or guarantees held.
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Waive the breach/provide retrospective consent.
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- Note that the above can be used in isolation or in combination.
- Failure to meet the repayment, monitoring and reporting, and consent obligations are events of default under the terms of the loan agreement. DCMS have options available to them to resolve the default and to protect their financial position.