Commentary relevant to Project Finance & Structured Transactions.
Read analysis by legal discipline. Articles appear only after editorial approval and publication.
A project can reach financial close in principle yet be unable to draw funds because a consent, security document or completion certificate is missing. Conditions precedent control the lender's exposure before disbursement, but poor drafting can turn them into an indefinite financing.
A special purpose vehicle can isolate project obligations only to the extent that its legal arrangements and actual conduct maintain that separation. The existence of a separate company does not, by itself, prevent cross-defaults, sponsor guarantees or diversion of project cash into unrelated.
A public infrastructure project may have attractive projected revenues and still be unfinanceable because lenders cannot protect the cash flows or recover value after a prolonged default. Bankability is determined by the allocation of risks and the enforceable rights available when the project.