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Debt Assumption Agreement
"I need a Debt Assumption Agreement where ABC Manufacturing LLC will assume SAR 5 million of debt from XYZ Industries, with payment to National Bank of Saudi Arabia to be completed by March 2025, including provisions for additional security in the form of equipment collateral."
1. Parties: Identifies the original debtor, the new debtor (assuming party), and the creditor
2. Background: Describes the original debt obligation, reason for assumption, and context of the agreement
3. Definitions: Defines key terms used throughout the agreement, including 'Assumed Debt', 'Effective Date', and other relevant terms
4. Debt Assumption: Core section detailing the assumption of debt, amount, and terms of transfer
5. Representations and Warranties: Statements of fact and assurances from all parties regarding their capacity and authority
6. Consideration: Details any consideration paid between original debtor and assuming party
7. Payment Terms: Specifies payment schedule, method, and currency of payments
8. Creditor's Rights: Preserves creditor's rights and remedies under the original debt obligation
9. Governing Law and Jurisdiction: Specifies Saudi Arabian law as governing law and relevant court jurisdiction
10. Notices: Specifies how and where formal notices should be delivered
11. Entire Agreement: Confirms the agreement represents the complete understanding between parties
1. Security Arrangements: Include when new security is being provided by the assuming party
2. Original Debtor Release: Include when original debtor is to be fully released from obligations
3. Shariah Compliance: Include detailed section when transaction involves Islamic financing structures
4. Joint and Several Liability: Include when original debtor remains partially liable
5. Tax Provisions: Include when tax implications need to be addressed between parties
6. Currency Conversion: Include when debt is in foreign currency and needs conversion provisions
7. Step-In Rights: Include when creditor requires right to step in under specific circumstances
1. Schedule 1 - Original Debt Documentation: Copy or summary of original debt agreement and related documents
2. Schedule 2 - Payment Schedule: Detailed schedule of payment dates, amounts, and calculation methodology
3. Schedule 3 - Security Details: Details of any security or collateral provided under the assumption
4. Appendix A - Form of Notices: Standard forms for various notices required under the agreement
5. Appendix B - Calculation Methodology: Detailed methodology for calculating payments, especially if involving profit rates instead of interest
6. Appendix C - Required Authorizations: List of required governmental or regulatory approvals
Authors
Banking & Financial Services
Real Estate & Construction
Energy & Infrastructure
Manufacturing
Healthcare
Telecommunications
Retail & Consumer Goods
Transportation & Logistics
Mining & Natural Resources
Family Business & Holdings
Legal
Finance
Treasury
Compliance
Risk Management
Corporate Finance
Credit
Commercial
Islamic Banking
Regulatory Affairs
Chief Financial Officer
Finance Director
Legal Counsel
Compliance Officer
Treasury Manager
Corporate Finance Manager
Risk Manager
Shariah Compliance Officer
Commercial Director
Business Development Manager
Contract Manager
Investment Manager
Credit Manager
Restructuring Officer
Company Secretary
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