Clifford Chance

Insolvency and automatic acceleration in US Chapter 11 - To accelerate, or not to accelerate, that is the question

March 12, 2025

In an article first published in the February 2025 issue of Butterworths Journal of International Banking and Financial Law, the authors focus on the two approaches to acceleration following a bankruptcy filing.  On the one hand, a typical US- style debt document provides for automatic acceleration on an insolvency event of default. On the other hand, many other jurisdictions typically do not include such automatic acceleration provisions in financing documents. This article discusses the primary differences between the Chapter 11 treatment of a loan that automatically accelerates the debt following an insolvency and a loan in which such acceleration is at the discretion of the lender.

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