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Loan Forbearance Agreement

Loan Forbearance Agreement Template for Germany

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Key Requirements PROMPT example:

Loan Forbearance Agreement

"I need a Loan Forbearance Agreement under German law for a manufacturing company that has missed two payments on their €2.5M equipment loan, seeking to restructure payments over 18 months starting March 2025, with monthly reporting requirements and additional security on company assets."

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Document background
The Loan Forbearance Agreement is essential when borrowers face temporary financial difficulties but demonstrate potential for recovery. This document, governed by German law, provides a structured framework for modifying existing loan obligations while ensuring compliance with German banking regulations and the Civil Code (BGB). It's typically used during economic downturns, company restructurings, or when borrowers experience temporary cash flow issues. The agreement details the original loan terms, specifies the forbearance period, outlines modified payment schedules, and includes any additional security or guarantees required. It's crucial for maintaining the lending relationship while providing temporary relief, and must account for German-specific legal requirements regarding contract modifications, banking regulations, and consumer protection laws where applicable.
Suggested Sections

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Details of the original loan agreement, current outstanding amounts, and reasons for seeking forbearance

3. Definitions: Definitions of key terms used in the agreement, including references to the original loan agreement

4. Acknowledgment of Debt: Confirmation of the current outstanding loan amount and borrower's acknowledgment of the debt

5. Forbearance Terms: Specific terms of the forbearance including duration and conditions

6. Modified Payment Schedule: Details of the new payment arrangements, including amounts and dates

7. Borrower's Representations: Borrower's confirmations regarding financial situation and ability to meet modified terms

8. Conditions Precedent: Conditions that must be met before the forbearance becomes effective

9. Default Provisions: Consequences of failing to comply with the forbearance terms

10. Original Loan Agreement: Confirmation that non-modified terms of the original loan agreement remain in effect

11. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

Optional Sections

1. Guarantor Consent: Required when the original loan has guarantors who must consent to the forbearance

2. Additional Security: Used when new collateral or security is being provided as part of the forbearance

3. Financial Covenants: Additional financial requirements or restrictions during the forbearance period

4. Reporting Requirements: Additional reporting obligations during the forbearance period

5. Release Provisions: Releases or waivers of claims related to the original loan agreement

6. Insurance Requirements: Additional insurance requirements during the forbearance period

7. Third Party Consents: When other creditors' or stakeholders' consent is required

Suggested Schedules

1. Schedule 1 - Original Loan Agreement: Copy or details of the original loan agreement being modified

2. Schedule 2 - Modified Payment Schedule: Detailed schedule of new payment dates and amounts

3. Schedule 3 - Outstanding Amount Calculation: Detailed calculation of current outstanding amount including principal, interest, and any fees

4. Schedule 4 - Additional Security Details: Details of any new security or collateral being provided

5. Schedule 5 - Conditions Precedent Documents: List of documents required to be delivered before effectiveness

6. Appendix A - Form of Compliance Certificate: Template for periodic compliance certification if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Original Loan Agreement
Forbearance Period
Effective Date
Outstanding Amount
Modified Payment Schedule
Default Event
Business Day
Interest Rate
Original Maturity Date
Extended Maturity Date
Payment Date
Facility
Security
Security Documents
Additional Security
Guarantor
Guarantees
Conditions Precedent
Compliance Certificate
Financial Statements
Material Adverse Effect
Permitted Payment
Existing Default
Forbearance Fee
Restructured Debt
Banking Day
Relevant Jurisdiction
Enforcement Action
Original Lender
Specified Default
Restructuring Plan
Reporting Requirements
Outstanding Principal
Accrued Interest
Default Interest
Waiver Period
Termination Event
Additional Obligations
Representations
Security Interest
Clauses
Interpretation
Acknowledgment of Debt
Forbearance Terms
Payment Obligations
Conditions Precedent
Representations and Warranties
Covenants
Events of Default
Security
Guarantees
Reporting Requirements
Information Undertakings
Financial Covenants
Fees and Expenses
Tax Provisions
Notices
Assignment and Transfer
Amendments and Waivers
Severability
Governing Law
Jurisdiction
Entire Agreement
Counterparts
Confidentiality
Force Majeure
Further Assurance
Relationship with Original Loan
Termination
Remedies and Waivers
Third Party Rights
Relevant Industries

Banking and Financial Services

Real Estate

Manufacturing

Retail

Construction

Healthcare

Technology

Agriculture

Transportation and Logistics

Energy and Utilities

Professional Services

Relevant Teams

Legal

Finance

Credit Risk

Compliance

Corporate Banking

Loan Administration

Treasury

Restructuring

Special Assets

Collections

Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Credit Risk Manager

Loan Officer

Restructuring Manager

Treasury Manager

Compliance Officer

Account Manager

Risk Assessment Officer

Corporate Banking Manager

Debt Restructuring Specialist

Banking Operations Manager

Legal Director

Collections Manager

Industries
Bürgerliches Gesetzbuch (BGB) §§ 488-507: German Civil Code sections on loan agreements, covering fundamental aspects of loan contracts, including modifications and amendments
BGB §§ 305-310: Provisions regarding standard business terms (AGB-Recht), crucial for ensuring the forbearance agreement terms are legally valid and enforceable
Kreditwesengesetz (KWG): German Banking Act, relevant for loans involving banking institutions and their obligations in loan restructuring
BGB §§ 241, 242: General provisions on obligations and good faith (Treu und Glauben), fundamental for contract modifications and negotiations
Verbraucherkreditgesetz provisions in BGB §§ 491-505: Consumer credit law provisions, applicable if the loan involves a consumer borrower
Insolvenzordnung (InsO): German Insolvency Code, relevant if the forbearance is related to preventing insolvency or part of a restructuring plan
Geldwäschegesetz (GwG): Anti-Money Laundering Act, for compliance requirements in significant loan modifications
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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