William Watson considers the tax indemnity provision commonly found in loan facilities that follow the model promulgated by the LMA and suggests how a borrower may best resolve the issue.
The focus of this article is the set of tax provisions commonly found in a loan facility between multiple lenders and a UK borrower that follows the model promulgated by the Loan Market Association (the LMA). This is not I fear a subject to set pulses racing. But the LMA’s documentation is used very widely and these provisions (the ‘Tax Clause’) have some defects from the borrower’s perspective which often go by default. An amended version of the Tax Clause is likely to appear soon and now seems a...
