Considerations of the situation. These agreements also contain more specific conditions, adapted to the reason for the conclusion of the agreement and the objectives to be achieved. The purpose of the leniency agreement is often to allow the borrower to take certain measures or make changes to his or her business. The overall objective should be defined and the actions to be taken — often subdivided into elements or steps — must be requirements within the framework of the agreement. Frequent information and disclosure of these measures will also help the lender track progress made before deadlines are met. Similarly, the lender and debtor, with the assistance of the restructuring expert, may establish an agreed weekly cash flow forecast for the reference period, during which receivables, expected cash recoveries, inventories and other credit-based information, planned cost reductions, liquidation and other items are projected. If the debtor does not operate within the appropriate parameters of the forecast, the default is considered to have occurred and the leniency period may be terminated. The acceptable parameters or the negative discrepancy between the net cash flow forecast and actual results, as well as the evidence on which this deviation should be measured, should also be negotiated and clearly indicated, either in percentage or monetary terms under the agreement. For example, the agreement should also cover financial and other reports, in addition to what is required in the loan documents. Because the borrower is in a difficult financial situation, more frequent and/or more detailed financial reporting may be required. Reports and updates related to the purpose of leniency and the borrower`s necessary measures should also be included.
The agreement also provides the lender with the opportunity to obtain more detailed information on the borrower`s assets in order to facilitate debt collection, if any, after the leniency has expired. B. The parties agree that, regardless of the leniency, the bank is entitled to submit to the borrower a formal request for debt repayment and a Memorandum of Understanding to enforce the guarantee with respect to the general security agreement granted by the borrower to the bank, provided that the bank does not take additional steps to enforce that debt or guarantee during the reference period. “When a lender is lenient, it takes control of the situation so that it can handle what is best for the lender.”  To the extent that additional loans are granted after the new guarantee is made available or if there is sufficient evidence that the guarantee has been granted to allow the debtor to continue its activities, the lender is in a strong enough position to rebut suspicions under the bia and provincial rules of preference.  Although the existing debt is not a valid consideration, there is some jurisprudence to support the notion of genuine leniency as a good consideration for the granting of additional guarantees.  In practice, and particularly when the appeal is brought within the framework of national preferences legislation, the courts have insisted that there be further financial progress before the new security can overcome a preferential challenge.  In the 2012 ONCA 765 (CanLII) Harry Snoek Limited Partnership (CanLII), the Ontario Court of Appeal refused to accept the argument that the terms of the restructuring of the payment terms, including lower interest rates, extended time limit and willingness to lenient, were sufficient consideration to deal with the trust company`s preferential challenge without a financial advance. What would happen if the existing unsecured debt amounted to $100,000.00 and an additional $50,000.00 tariff was advanced as a precondition for the new guarantee, would that be a sufficient “value” to avoid a successful, defenceless preferential challenge? There is case law that supports an argument that the party