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Debt Assumption Agreement Template for Pakistan

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Key Requirements PROMPT example:

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."

Document background
The Debt Assumption Agreement is a crucial document used in Pakistani business and financial transactions where one party wishes to take over the debt obligations of another. This agreement is commonly utilized in corporate restructuring, merger and acquisition transactions, family business successions, or situations where a stronger entity assumes the debt of a weaker one. The document must comply with Pakistani law, including the Contract Act 1872 and, where applicable, Islamic banking regulations. It typically includes detailed provisions about the original debt, terms of assumption, security arrangements, and ongoing obligations of all parties. The agreement is particularly important in protecting the creditor's rights while facilitating the smooth transfer of debt obligations between parties. Key considerations include ensuring proper consent from all parties, maintaining existing security arrangements, and addressing regulatory compliance requirements.
Suggested Sections

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

Optional Sections

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

Suggested Schedules

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

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions










































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Relevant Industries

Banking and Financial Services

Real Estate

Manufacturing

Construction

Infrastructure

Energy

Telecommunications

Mining

Family Business

Retail

Healthcare

Education

Relevant Teams

Legal

Finance

Treasury

Corporate Finance

Risk Management

Compliance

Credit Administration

Islamic Banking

Corporate Secretarial

Restructuring

Relevant Roles

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

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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