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ARTICLE · 24 APRIL 2020

Covid-19 Impact: Anti-Hoarding & Credit Facilities

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The COVID-19 pandemic continues to cause major economic disruption; resulting in a sharp downturn in financial markets and increased uncertainty.

CanadaCoronavirus (COVID-19)
Michael Wunder
Michael Wunder
Tristan Davis
Tristan Davis
Daniel P. Cipollone
Daniel P. Cipollone
Patience Kalu Omokhodion
Patience Kalu Omokhodion
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The COVID-19 pandemic continues to cause major economic disruption; resulting in a sharp downturn in financial markets and increased uncertainty. In this challenging economic environment, unless prohibited, borrowers may be incentivized to obtain extra loan advances and hold cash that may otherwise have been utilized for repayments, acquisitions or distributions. Some borrowers may seek to draw down on their existing credit facilities in order to improve their cash positions, including borrowers with borrowing based credit facilities facing the prospect of reduced availability due to:

  • decreasing inventory values and falling (or non-existent) accounts receivables; or
  • creditors lowering the advance rates on the basis of changed market circumstances.

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