PARALLEL DEBT IN CURACAO
New legislation
It has become market practice in Curacao, and also in the Netherlands, to create a separate (parallel) obligation, owed by the borrower (or guarantor) to the security agent in its own name, on the terms and in an amount equal to the original (principal) obligations owing by the borrower (or guarantor) to the lenders.
The security rights are then granted to the security agent in its own name to secure the parallel debt. This “parallel debt” structure is usually reflected in the facility agreement and gives the security agent an own and independent right to demand payment by …
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STRUCTURING TRANSACTIONS IN THE DUTCH CARIBBEAN, THE SKY IS THE LIMIT
Example: Parallel debt structures under Dutch Caribbean law
In a parallel debt structure, a company (the borrower) acknowledges a debt to an appointed agent by promising to pay the agent an amount equal to the sum of the borrower’s obligations under the (syndicated) loan agreement with the lenders. Thus an independent, parallel debt is created between the borrower and the agent for which it is (further) agreed that this debt (not only becomes due and payable but also) will be considered paid and discharged at the same time and to the same extent as the underlying loans so that (of …
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