Explain why direct agreements are needed to protect lenders who are not party to a project's key contracts.
Law & Contract Management
Direct Agreements and Lender Step-In Rights in Project Finance
Trains project finance lawyers and lenders' advisers to draft and negotiate direct agreements that protect lender step-in and cure rights across a project's key contracts.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
Lenders financing a project are relying on contracts they did not negotiate and cannot directly enforce, since the project company, not the bank, is the counterparty to the construction, offtake and concession agreements that make the project viable. Direct agreements exist to close that gap, giving lenders the right to be notified of a default, to step in and complete the project company's obligations, and to novate the contract to a substitute entity if the project company fails. This course examines how direct agreements are structured across the main project contracts, including EPC and construction contracts, offtake and supply agreements, and government concessions or licences. Participants work through cure periods and notice mechanics that give lenders time to assess a default before a counterparty terminates, step-in rights and the practical steps needed to exercise them without disrupting project operations, and consent rights over amendments that would otherwise dilute the lenders' security package. The course also addresses conflicts between multiple direct agreements on the same project and how they are reconciled through an intercreditor or common terms framework. Delegates draft step-in and cure provisions for a representative EPC direct agreement and negotiate a disputed consent right during the course.
Expected Learning Outcomes
Draft cure period and notice provisions that give lenders time to respond before a counterparty terminates.
Structure step-in rights that let lenders or a substitute entity complete project obligations without disruption.
Negotiate novation mechanics that transfer a project contract to a substitute project company on default.
Draft consent rights over contract amendments that protect the value of a lender's security package.
Reconcile overlapping direct agreements across multiple project contracts through a common terms framework.
Advise counterparties on the practical limits direct agreements place on their own termination rights.
Who Should Attend
Project finance lawyers acting for lenders, sponsors or project companies
Banking and structured finance professionals structuring project finance security packages
In-house counsel at infrastructure, energy and construction companies negotiating project contracts
EPC contractors and offtakers whose agreements are subject to lender direct agreements
Export credit agency and multilateral lender representatives reviewing project finance documentation
Financial advisers and lenders' technical advisers assessing step-in and cure arrangements
Course Modules
Select any module to see its sessions and points.
01Why Project Finance Needs Direct Agreements
2 sessions · 8 points
Session 1Lender Exposure to Project Contracts
- Explain why lenders without privity to project contracts need direct agreements to protect their security.
- Map the key project contracts, including EPC, offtake, supply and concession agreements, that typically need one.
- Assess how a project contract's termination would affect project cash flow and a lender's debt service cover.
- Identify which counterparties are likely to resist granting direct agreement rights and why.
Session 2Core Direct Agreement Structure
- Outline the standard architecture of a direct agreement: notice, cure, step-in, novation and consent provisions.
- Distinguish a direct agreement from a collateral warranty and explain when each instrument is appropriate.
- Align direct agreement terms with the facility agreement's events of default and enforcement provisions.
- Draft conditions precedent requiring direct agreements before financial close on a project financing.
02Cure Periods and Notice Mechanics
2 sessions · 8 points
Session 1Structuring Cure Rights
- Negotiate cure periods long enough for lenders to assess a default without unduly delaying a counterparty's remedy.
- Draft notice provisions requiring a counterparty to notify lenders of default before exercising termination rights.
- Distinguish curable and incurable defaults and address each differently within the direct agreement.
- Address costs and liability for a lender that chooses to cure a project company's default on its behalf.
Session 2Managing the Period Between Default and Step-In
- Advise on interim measures lenders can take during a cure period without triggering an unwanted step-in.
- Coordinate technical adviser input to assess whether a default is capable of remedy within the cure period.
- Manage communications with a counterparty during the cure period to preserve the project relationship.
- Draft standstill provisions that pause counterparty remedies while lenders evaluate their options.
03Step-In and Novation
2 sessions · 8 points
Session 1Exercising Step-In Rights
- Draft step-in provisions specifying who may step in, on what notice and subject to which conditions.
- Address a stepping-in lender's assumption of project company obligations and associated liability exposure.
- Plan the practical steps needed to keep a project operating during and immediately after a step-in event.
- Advise on the interaction between step-in rights and any government or regulatory consents the project needs.
Session 2Novation to a Substitute Project Company
- Draft novation mechanics that transfer a project contract to a substitute entity nominated by the lenders.
- Address counterparty consent rights and reasonable objection grounds to a proposed substitute project company.
- Allocate liability for pre-novation breaches between the original and substitute project company.
- Coordinate novation of multiple linked contracts so the substitute entity receives a coherent project.
04Consent Rights and Multi-Contract Coordination
2 sessions · 8 points
Session 1Consent Rights Over Amendments and Waivers
- Draft consent rights requiring lender approval before a project contract is amended, waived or terminated.
- Negotiate materiality thresholds that focus consent rights on changes that genuinely affect lender security.
- Address deemed consent and response deadlines that stop a lender's silence from paralysing project decisions.
- Balance counterparty operational flexibility against the lender's need to control changes to project economics.
Session 2Reconciling Multiple Direct Agreements
- Identify conflicts that arise where several direct agreements on one project impose inconsistent obligations.
- Use an intercreditor or common terms agreement to sequence step-in and consent rights across facilities.
- Coordinate direct agreement provisions with security documents to avoid gaps in the overall lender package.
- Review a project's full direct agreement suite periodically as contracts are amended or refinanced.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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