Before discussing MAC clauses in the granting of credits, we briefly discuss MAC clauses in general and how they have been dealt with by the courts in connection with mergers and acquisitions (“MAA”), where such litigation is much more frequent. To this end, lenders should receive as much financial information as possible from the borrower, including, if applicable, their information rights under the loan agreement. They should also try to understand the source of the funds on which the borrower is considering repaying the loan, since a borrower that relies exclusively on commercial profits has undergone a significant adverse change rather than a borrower with large cash reserves. Finally, it is important for lenders to remain informed of the government`s financial assistance to businesses that are in difficulty as a result of COVID-19, as this could be sufficient to produce non-significant negative effects that would otherwise be essential. Essential Negative Amendment Clauses (“MACs”), sometimes referred to as “essential adverse effects” (“MAE”), are included in many funding promises and can often be the subject of important negotiations. Nevertheless, MAC clauses are often the most ambiguous clauses in a funding agreement and are therefore often subject to multiple interpretations. However, this ambiguity is essential to the purpose of the MAC clause, which, in the broad sense, is to protect the lender from due diligence deficiencies, unforeseen changes in the borrower`s financial situation, unexpected and drastic market fluctuations, and any other element that could be considered a “substantial” change in the borrower`s ability to repay the loan. While borrowers may view the MAC clauses as a sign that the lender is not willing to fully commit to the loan, the lender should consider the MAC clauses as necessary additional protection against unforeseen and, in fact, unpredictable significant changes. In order to determine whether the effects of COVID-19 on the borrower could constitute a material adverse change, lenders should first carefully analyze the language of the MAC clause in question, while being particularly attentive: although Carey did not find a delayed event on the basis of a poorly presented Mac clause, the Tribunal found that there had been other breaches and Carey was therefore ultimately able to identify a late event on the basis of a clause Mac misrepreserated. to recover the amounts it claims. The USSR Commission received a request to the borrowers and its claim as part of the guarantee that had been provided by one of the group`s companies.

Cases in which the interpretation of MAC clauses is taken into account are rare and this case therefore provides useful guidance, in particular by referring, with the agreement, to the academic commentary on the aforementioned MAC clauses. [30] See z.B. Michelle Shenker Garrett`s article, in which she supported the use of reverse termination rights instead of MAC clauses in the context of MAAs, since the MAC clauses “Efficiency and Certainty in Uncertain Times: The Material Adverse Clause Change Revisited” of 2010 were negotiated in Colum. Journal of Law and Social Problems v. 43 No 3. In In re Lyondell Chem. Co., 567 B.R. 55 (Bankr. S.D.N.Y. 2017, aff`d, 585 B.R. 41 (S.D.N.Y.

2018), the Bankruptcy Court of the Southern District of New York considered (among other things) a breach of a borrower`s contractual claim for a lender`s refusal to finance a $750 million underwriting application on a revolving line of credit on the basis of the relevant maceraire clause.3 , the Lyon court ruled that the lender had breached its contract with the borrower. refusing to fund the draw application in the circumstances.