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Law Assignment Question

Alpha Bank recently entered into a Loan Agreement with Estelle Limited ('Estelle'). The form of the Loan Agreement is based on the London Loan Market Association standard form. The loan has yet to be drawn down by Estelle.   Alpha Bank is very concerned about its obligations under the loan in light of the ongoing international credit crisis and seeks your advice on whether there are legitimate grounds upon which it can refuse to comply with any drawdown notice delivered by Estelle and also the potential liability it may be subject to in the event it refuses to comply with any such drawdown notice.

Law Assignment Solution

Alpha bank recently entered into a Loan Agreement with Estelle Limited ('Estelle'). The form of the Loan Agreement is based on the London Loan Market Association standard form. The loan has yet to be drawn down by Estelle.

A drawdown notice is a precedent drawdown notice from the Estelle Limited to a lender requesting a drawdown of a loan under a bilateral facility agreement. It can be used in conjunction with the precedent bilateral facility agreement.[1] The Alpha bank should keep a credit facility at the Estelle Limited's disposal, to be utilized according to the provisions of the contract, based on which the Alpha bank shall provide the Estelle Limited with loans in the maximum value as specified in the client contract during the availability period, in the currency and the time limitation as specified by the client through the contract.

The Drawdown Notice shall only be considered valid only

All drawdown notices not complying with all of the above conditions shall be considered invalid, except if the Alpha bank explicitly waives off the fulfillment of any of the above-mentioned conditions. The submission of the drawdown notice to the Alpha bank shall signify the Estelle Limited's irrevocable commitment to use the loan specified therein within the terms and conditions mentioned thereof.

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