The Limited Recourse Loan Agreement is a specialized financing document used in Australia when lenders agree to limit their enforcement rights to specific assets or cash flows, rather than having recourse to all of the borrower's assets. This type of agreement is particularly common in project finance, asset-based lending, and structured finance transactions where the loan is secured by high-value assets or predictable cash flows. The document includes detailed provisions regarding the loan facility, security arrangements, and enforcement mechanisms, while carefully delineating the assets available for recourse. It is structured to comply with Australian federal and state laws, including the Personal Property Securities Act 2009 (Cth) and relevant banking regulations. This agreement type is particularly useful for project-specific financing where the lender's risk assessment focuses on the viability and value of specific assets rather than the borrower's overall creditworthiness.
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1. Parties: Identifies and defines the Lender and Borrower
2. Background: Sets out the context of the loan and its limited recourse nature
3. Definitions and Interpretation: Defines key terms and interpretation principles
4. The Loan: Details the loan amount, purpose, and drawdown conditions
5. Interest: Specifies interest rate, calculation method, and payment terms
6. Repayment: Sets out repayment terms, prepayment rights, and payment mechanics
7. Limited Recourse Nature: Defines the limited recourse provisions and identifies specific assets against which recourse is available
8. Security: Details the security arrangements over the specified assets
9. Representations and Warranties: Standard and specific representations regarding the borrower and secured assets
10. Undertakings: Borrower's obligations regarding the loan and secured assets
11. Events of Default: Specifies events triggering default and enforcement rights
12. Enforcement: Details enforcement rights limited to the specified assets
13. Expenses and Indemnities: Allocates costs and establishes indemnities (subject to limited recourse)
14. Assignment and Transfer: Rules for transfer of rights and obligations
15. Notices: Communication requirements and contact details
16. General Provisions: Standard boilerplate clauses modified for limited recourse nature
17. Governing Law and Jurisdiction: Specifies Australian law as governing law and jurisdiction
1. Security Trustee Provisions: Required if there are multiple lenders with a security trustee structure
2. Guarantees: Include if there are any guarantors of the secured obligations
3. Interest Capitalization: Include if interest can be capitalized rather than paid
4. Subordination: Required if the loan is subordinated to other debt
5. Special Purpose Vehicle Provisions: Include if the borrower is an SPV with specific restrictions
6. Cash Waterfall: Include if there is a specific order for application of payments
7. Project Covenants: Required if the loan is for a specific project with project-specific requirements
8. Market Disruption: Include for floating rate loans to address market disruption events
1. Schedule 1 - Loan Terms: Details of loan amount, interest rate, repayment dates, and other key commercial terms
2. Schedule 2 - Conditions Precedent: List of required documents and conditions for drawdown
3. Schedule 3 - Secured Assets: Detailed description of assets against which recourse is available
4. Schedule 4 - Drawdown Notice: Form of drawdown notice
5. Schedule 5 - Repayment Schedule: Amortization schedule if applicable
6. Schedule 6 - Security Documents: Forms of security documents for the secured assets
7. Schedule 7 - Notice Details: Contact details for all parties
8. Appendix A - Financial Covenants: Detailed financial covenants and calculations if applicable
Relevant legal definitions
Clauses
Relevant Industries
Infrastructure
Project Finance
Real Estate
Mining
Renewable Energy
Oil & Gas
Transport
Agriculture
Technology
Aviation
Shipping
Healthcare
Relevant Teams
Legal
Finance
Treasury
Risk Management
Credit
Corporate Finance
Project Finance
Commercial
Compliance
Operations
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Project Finance Manager
Legal Counsel
Corporate Lawyer
Banking & Finance Lawyer
Risk Manager
Credit Manager
Investment Manager
Project Director
Structured Finance Manager
Asset Manager
Commercial Director
Company Secretary
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