May 17, 2016
A recent article in the Legal Post highlighted energy companies' increasing concerns about the credit worthiness of business partners, particularly when entering into midstream service agreements. Partner David Cuschieri is quoted in the article in reference to protecting clients’ rights in these agreements. Below is an excerpt.
"We’ve been challenged in the last couple of years to draft around these concerns," adds David Cuschieri, a partner with Torys in Calgary. One way to alleviate worry is to base the availability of rights or terms on a party's credit rating. Another is to prevent parties from assigning their rights to a third party who may be a credit risk.
Companies are also insisting on more security or up-front payments before doing a deal. They're also looking for early triggers that might give them the right to protect themselves if they detect signs their counter party poses a risk.
"The no. 1 thing is know your partner. Know who you're getting into business with," Cuschieri says.
To read the full article, click here.