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On the Application and limitation of Cross Default Clause in the International Syndicated Loan Agreement
Pages: 41-45
Year: Issue:  12
Journal: Xi'an Finance

Keyword:  international syndicated loancross defaultanticipatory breach;
Abstract: Since the international syndicated loan has the characteristics of large amount,long maturity and high risk,it is the practice for banks to use cross default clauses in the international syndicated loan to avoid the credit risk and guarantee to take back loans in time.The cross default clauses can ensure the syndicate to take relief measures no later than other creditors,which ensures the timeliness of the action,therefore can effectively reduce the risk.But in recent years,there has been the trend that the cross default clause has been abused,and the fairness of the cross default clause has been criticized by many scholars who think that the cross default clauses are the tools which are utilized by banks relying on their advantageous positions to put borrowers in the disadvantage position.For this reason,starting from the definition and the legal basis of the cross default clauses,the paper analyzes its legal effect and the scope of application,trying to put forward suggestions to improve the cross default system from such aspects as failing to perform the main body,default feature and amount,etc.,thereby limiting the abuse of the cross default clauses and protecting the lawful rights and interests of both sides of the loan.
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