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Debt Assumption Agreement
"I need a Debt Assumption Agreement where my family-owned manufacturing company takes over a PKR 50 million business loan from our subsidiary company, with the debt to be assumed by March 2025 and including Islamic finance compliance provisions."
1. Parties: Identification of the Original Debtor, New Debtor (Assuming Party), and Creditor
2. Background: Context of the original debt, reason for assumption, and current status of the debt
3. Definitions: Definitions of key terms used throughout the agreement, including 'Original Debt', 'Assumption Date', and 'Security'
4. Debt Assumption: Core provision where the new debtor assumes the debt obligations and the terms of such assumption
5. Representations and Warranties: Statements of fact and assurances from all parties regarding their capacity, authority, and the debt status
6. Original Debtor's Obligations: Ongoing responsibilities of the original debtor and extent of their release from obligations
7. New Debtor's Obligations: Specific obligations assumed by the new debtor, including payment terms and compliance requirements
8. Creditor's Consent: Express consent of the creditor to the debt assumption and any conditions attached
9. Consideration: Details of any consideration paid between original and new debtor for the assumption
10. Governing Law and Jurisdiction: Specification of Pakistani law as governing law and jurisdiction for disputes
11. Notices: Process and addresses for serving notices under the agreement
12. Execution: Signature blocks and execution formalities
1. Islamic Finance Compliance: Required if the debt must comply with Shariah principles, detailing the Islamic structure and compliance requirements
2. Security Arrangements: Required if there is existing security that needs to be transferred or new security to be created
3. Guarantees: Include if there are third-party guarantees involved in the debt arrangement
4. Conditions Precedent: Include if the assumption is subject to certain conditions being met before becoming effective
5. Tax Provisions: Include specific tax-related provisions if the assumption has significant tax implications
6. Assignment and Transfer: Include if parties want to specifically address future transfer rights
7. Regulatory Compliance: Required if the debt assumption needs specific regulatory approvals or compliance
8. Step-In Rights: Include if creditor requires specific rights to step in under certain circumstances
1. Schedule 1 - Original Debt Details: Detailed description of the debt being assumed, including amount, interest/profit rate, payment schedule
2. Schedule 2 - Payment Terms: Detailed payment obligations, including dates, amounts, and method of payment
3. Schedule 3 - Security Details: List and description of any security arrangements, including assets charged or mortgaged
4. Schedule 4 - Existing Finance Documents: List of all relevant finance documents that form part of the debt arrangement
5. Appendix A - Form of Notices: Template notices for key communications under the agreement
6. Appendix B - Regulatory Approvals: Copies or details of any required regulatory approvals
Authors
Banking and Financial Services
Real Estate
Manufacturing
Construction
Infrastructure
Energy
Telecommunications
Mining
Family Business
Retail
Healthcare
Education
Legal
Finance
Treasury
Corporate Finance
Risk Management
Compliance
Credit Administration
Islamic Banking
Corporate Secretarial
Restructuring
Chief Financial Officer
Finance Director
Treasury Manager
Corporate Lawyer
Legal Counsel
Company Secretary
Financial Controller
Credit Manager
Risk Manager
Restructuring Officer
Corporate Finance Manager
Investment Banker
Compliance Officer
Islamic Banking Officer
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