Module 5 · Chapter 14

Conditions Precedent and Closing

A facility agreement binds everyone when it is signed, but no money moves until a list of documents is in. This chapter shows how that list is checked, and how the loan funds on completion day.

≈ 12 min read 8-question test

In this chapter

  • Why the loan binds at signing but funds only later
  • What each document on the conditions list is for
  • How the checklist and completion day run

14.1Conditions precedent in one paragraph

The Sunrise facility agreement bound everyone from the day it was signed. The lenders' commitments existed from that day, and the commitment fee ran on them. What waited was the money.

The lenders must fund only once a list of documents, the conditions precedent (CPs), is in. In an M&A deal, conditions hold up the purchase itself. In a loan, they hold up only the drawing.

Key point

The conditions precedent hold up the money, not the contract. If they are never met, nothing is lent. But the agreement, its fees and Atlas's promises were binding from signing.

Also in this chapter

  1. Two lists and two gates
  2. Part A shows that Atlas can borrow and has agreed to
  3. Part B ties the money to completion
  4. The agent decides when a condition is met
  5. The checklist shows when the money can move
  6. How the money moves on completion day
  7. What remains after completion
  8. Your job

Preview

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