New Video! Representations and Warranties in Credit Agreements

Representations and warranties are designed to establish an assumed set of facts upon which lenders agree to extend credit to the borrower and, which if true, provide comfort to the lenders that the borrower’s obligations will be repaid by the borrower on the maturity date. Watch this video providing an overview of the standard representations and warranties in a credit agreement to learn the basics.

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Related Content

• Representations and Warranties in Credit Agreements
  Read this practice note describing the standard representations and warranties in a credit agreement. It also discusses the timing of drafting representations and warranties (particularly in an acquisition context), including appropriate materiality and knowledge qualifiers.

• Negative Covenants in Credit Agreements
  Review this practice note describing negative covenants and the related definitions, which are among the most heavily negotiated provisions in a credit agreement.

• Affirmative Covenants in Credit Agreements
  Check out this discussion of affirmative covenants, which require a borrower to act in order to remain in compliance with the credit agreement.

Practical Guidance Updates
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• Market Standards Highlights:
  • scPharmaceuticals Inc. On October 13, 2022, scPharmaceuticals, Inc. (the “Company”) entered into a Credit Agreement and Guaranty (the “Credit Agreement”) among the Company, subsidiary guarantors, lenders, and Oaktree Fund Administration, LLC, as administrative agent. The Credit Agreement establishes a $100 million term loan facility. Borrowings under the loan will bear interest at a rate per annum equal to three-month term SOFR plus 8.75% subject to reduction based on net sales.
    
    Notable Provisions: The Company may voluntarily prepay the outstanding term loan, subject to a make-whole for the first two years following the closing date, and thereafter a prepayment premium equal to (i) 3.0% of the principal amount of the term loan prepaid, if prepaid after the second anniversary of the closing date through and including the third anniversary of the closing date, (ii) 1.0% of the principal amount of the term loan if prepaid after the third anniversary of the closing date through and including the fourth anniversary of the closing date, with no prepayment premium due after the fourth anniversary of the closing date through the maturity date. For more information on prepayments, see Repayment and Prepayment Provisions in Credit Agreements and The Client Asks: Can We Pay Down Our Debt?

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