Derivative Considerations for End-users in Times of Disruption

The coronavirus COVID-19 is causing disruption across many business contexts and it would be prudent to do a check of your contractual obligations to determine if there are any consequences of the current disruption. While this should be done across contracts, including loan agreements, bond documents and other type of finance and commercial agreements, this note is intended to provide a short checklist for review of your derivatives agreements in this time of stress. The good news is that the experience with derivatives documentation during the financial crisis in 2008 and Lehman insolvency tested many of these provisions so the marketplace has more certainty as to how to interpret these provisions in the time of stress than we did in 2008.