Debt Assumption Agreement

Debt Assumption Agreement Template for New Zealand

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Key Requirements PROMPT example:

"I need a Debt Assumption Agreement for our subsidiary company ABC Ltd to take over a $2.5M commercial loan from our parent company XYZ Holdings, with the transfer to be effective from March 1, 2025; the original loan is with National Bank and is secured against commercial property."

Document background

The Debt Assumption Agreement is a crucial legal instrument used in New Zealand when one party wishes to take over the debt obligations of another. This document is commonly utilized in business acquisitions, corporate restructuring, property transactions, or family arrangements where debt transfer is necessary. The agreement must comply with New Zealand's legal framework, particularly the Contract and Commercial Law Act 2017, and typically includes detailed provisions about the debt being assumed, payment terms, security arrangements, and the rights and obligations of all parties. It's essential for protecting the interests of the original debtor, new debtor, and creditor, while ensuring a smooth transition of debt obligations and maintaining legal enforceability of the debt under New Zealand law.

Suggested Sections

1. Parties: Identifies all parties involved: the original debtor, the party assuming the debt (new debtor), and the creditor

2. Background: Describes the original debt, its current status, and the intention to transfer the debt obligation

3. Definitions: Defines key terms used throughout the agreement

4. Debt Assumption: Details the specific debt being assumed and the mechanism of assumption

5. Representations and Warranties: Statements of fact and assurances from all parties regarding their capacity and authority

6. Original Debtor's Obligations: Outlines the ongoing obligations and/or release of the original debtor

7. New Debtor's Obligations: Specifies the obligations assumed by the new debtor

8. Creditor's Consent and Rights: Documents the creditor's consent to the assumption and their preserved rights

9. Payment Terms: Specifies how and when payments will be made under the assumed debt

10. Default and Remedies: Describes what constitutes default and the available remedies

11. Governing Law and Jurisdiction: Specifies New Zealand law as governing law and jurisdiction for disputes

Optional Sections

1. Security Arrangements: Required when the assumed debt is secured by collateral or guarantees

2. Conditions Precedent: Include when the debt assumption is subject to specific conditions being met

3. Novation Provisions: Include when the agreement completely releases the original debtor

4. Tax Implications: Include when there are significant tax consequences to address

5. Assignment and Transfer: Include when parties need the ability to transfer their rights or obligations

6. Joint and Several Liability: Include when multiple parties are assuming the debt

7. Regulatory Compliance: Include when the debt assumption requires specific regulatory approvals or compliance

Suggested Schedules

1. Schedule 1 - Details of Original Debt: Comprehensive details of the debt being assumed, including original loan agreement, current balance, and payment history

2. Schedule 2 - Payment Schedule: Detailed payment terms, including amounts, dates, and payment methods

3. Schedule 3 - Security Details: Description of any security or collateral associated with the debt

4. Appendix A - Original Loan Documentation: Copies of the original loan agreement and related documents

5. Appendix B - Financial Statements: Relevant financial statements of the new debtor demonstrating capacity to assume the debt

Authors

Alex Denne

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Banking and Financial Services

Real Estate

Construction

Corporate Services

Manufacturing

Retail

Healthcare

Agriculture

Mining and Resources

Infrastructure

Relevant Teams

Legal

Finance

Treasury

Credit and Collections

Risk Management

Corporate Affairs

Mergers and Acquisitions

Commercial Operations

Debt Recovery

Corporate Secretariat

Relevant Roles

Chief Financial Officer

Financial Controller

Corporate Lawyer

Legal Counsel

Finance Manager

Credit Manager

Risk Manager

Treasury Manager

Debt Recovery Officer

Corporate Secretary

Business Development Manager

Restructuring Manager

Account Manager

Commercial Manager

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