Cross-Defaulted

Last Updated: Jun 6, 2019

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A provision in a credit agreement that places the borrower in default if they are in default on another credit agreement. The defaults could be to the same lender that has loans to Borrower A and its affiliates. The cross defaults could also be between third parties (Lender A and Lender B) who have exposure to the same borrower. Most credit agreements have a general provision that stipulates that defaults under any lending relationship is a default under the lender's agreement.