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Debt Cancellation Agreement Template for India

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Key Requirements PROMPT example:

Debt Cancellation Agreement

"I need a Debt Cancellation Agreement for a secured corporate loan of INR 50 million, where our company (ABC Technologies Ltd) wants to cancel the remaining debt of INR 15 million owed by XYZ Solutions Pvt Ltd, including release of all securities, to be effective from March 1, 2025."

Document background
The Debt Cancellation Agreement is a crucial legal instrument used in Indian business and financial transactions when parties wish to formally terminate existing debt obligations. This document becomes necessary when a creditor agrees to forgive all or part of a debt, whether due to financial restructuring, settlement negotiations, or other commercial arrangements. It must comply with Indian contract law, particularly the Indian Contract Act, 1872, and may require consideration of various tax implications under Indian income tax laws. The agreement typically includes detailed information about the original debt, the reasons for cancellation, any conditions attached to the cancellation, and the mutual obligations of the parties. When drafting a Debt Cancellation Agreement, special attention must be paid to stamp duty requirements and registration formalities if applicable under Indian law. The document is particularly relevant in scenarios involving corporate debt restructuring, family settlements, or commercial dispute resolutions.
Suggested Sections

1. Parties: Identifies and defines the creditor and debtor with their complete legal names, addresses, and any registration details if companies

2. Background: Describes the original debt agreement, its date, amount, and current outstanding balance

3. Definitions: Defines key terms used throughout the agreement including 'Debt', 'Original Agreement', 'Effective Date', etc.

4. Acknowledgment of Debt: Confirms the current outstanding amount and validity of the original debt

5. Cancellation Terms: Specifies the terms and conditions of the debt cancellation, including any partial payments if applicable

6. Release and Discharge: Details the mutual release of obligations and claims related to the debt

7. Representations and Warranties: Statements by both parties confirming their authority to enter into the agreement and the accuracy of information provided

8. Governing Law: Specifies that Indian law governs the agreement and defines jurisdiction for disputes

9. Entire Agreement: Confirms this agreement supersedes all previous agreements regarding the debt cancellation

Optional Sections

1. Partial Payment Terms: Required when debt cancellation involves some payment rather than complete forgiveness

2. Security Release: Needed when original debt was secured by assets or guarantees that need to be released

3. Tax Implications: Include when there are specific tax consequences that need to be addressed

4. Confidentiality: Required when parties wish to keep the cancellation terms private

5. Regulatory Compliance: Necessary when either party is regulated entity or transaction requires regulatory approval

6. Future Business Relations: Include when parties wish to address their future business relationship post-cancellation

Suggested Schedules

1. Schedule 1 - Original Debt Details: Details of the original debt agreement including date, amount, interest rates, and payment history

2. Schedule 2 - Security Details: List of any securities, guarantees, or collateral to be released

3. Schedule 3 - Payment Schedule: If partial payment is involved, details of payment amounts and dates

4. Appendix A - Required Documents: List of documents to be executed for completing the cancellation process

5. Appendix B - Regulatory Approvals: Copies of any required regulatory approvals or compliance certificates

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions



































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Relevant Industries

Banking & Financial Services

Real Estate

Manufacturing

Retail

Healthcare

Information Technology

Construction

Education

Professional Services

Agriculture

Infrastructure

Mining & Resources

Relevant Teams

Legal

Finance

Treasury

Credit Control

Risk Management

Compliance

Corporate Secretarial

Tax

Debt Recovery

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Financial Controller

Credit Manager

Debt Recovery Officer

Risk Manager

Company Secretary

Treasury Manager

Accounts Manager

Compliance Officer

Managing Director

Business Development Manager

Restructuring Specialist

Industries







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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