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Debt Novation Agreement
"I need a Debt Novation Agreement for transferring a corporate loan of INR 50 million from our parent company to our newly formed subsidiary, with the transfer to be effective from March 1, 2025; the original loan was from HDFC Bank and they have already consented to the transfer."
1. Parties: Identifies all parties involved: the Original Debtor, the New Debtor, and the Creditor
2. Background: Recitals explaining the existing debt arrangement and the intention to novate
3. Definitions: Defines key terms used throughout the agreement
4. Novation: Core clause establishing the novation of the debt from the Original Debtor to the New Debtor
5. Release of Original Debtor: Provisions confirming the release of the Original Debtor from obligations
6. Assumption of Obligations: Details of the New Debtor's assumption of the debt obligations
7. Representations and Warranties: Standard representations from all parties regarding their capacity and authority
8. Effective Date: Specifies when the novation takes effect
9. Governing Law and Jurisdiction: Specifies Indian law as governing law and determines jurisdiction for disputes
10. Notices: Details how formal notices should be given between parties
11. Counterparts: Allows execution in multiple counterparts
1. Security Arrangements: Required when existing security needs to be released or new security is being provided
2. Regulatory Compliance: Include when the transaction involves regulated entities or requires regulatory approvals
3. Tax Provisions: Include specific tax-related provisions when there are significant tax implications
4. Conditions Precedent: Include when novation is subject to fulfillment of certain conditions
5. Consent of Third Parties: Required when third party consents are necessary for the novation
6. Assignment: Include if parties wish to restrict or permit future assignment of rights
7. Costs and Expenses: Include when there's a need to specify who bears the transaction costs
1. Schedule 1 - Existing Debt Details: Details of the original debt agreement, including amount, interest rate, and payment terms
2. Schedule 2 - Payment Schedule: New or continuing payment schedule post-novation
3. Schedule 3 - Security Details: Details of any security or collateral associated with the debt
4. Schedule 4 - Existing Agreement: Copy or details of the agreement being novated
5. Schedule 5 - Conditions Precedent: List of conditions that must be satisfied before novation becomes effective
6. Appendix A - Form of Notices: Standard forms for any notices required under the agreement
7. Appendix B - Completion Requirements: Checklist of documents and actions required to complete the novation
Authors
Financial Services
Banking
Corporate Services
Real Estate
Manufacturing
Infrastructure
Construction
Retail
Healthcare
Technology
Telecommunications
Legal
Finance
Treasury
Corporate Finance
Risk Management
Compliance
Company Secretarial
Senior Management
Banking Relations
Credit
Chief Financial Officer
Finance Director
Legal Counsel
Corporate Lawyer
Finance Manager
Treasury Manager
Debt Restructuring Specialist
Company Secretary
Risk Manager
Compliance Officer
Managing Director
Chief Executive Officer
Financial Controller
Banking Relationship Manager
Corporate Finance Manager
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