Payments Received by Defaulting Lender Clause Samples

The "Payments Received by Defaulting Lender" clause governs how payments are handled when a lender in a syndicated loan arrangement is in default under the loan agreement. Typically, if a lender is considered a defaulting lender—such as by failing to fund its share of a loan or breaching other obligations—any payments that would otherwise be due to that lender may be redirected, withheld, or applied differently, often to protect the interests of the other non-defaulting lenders or the borrower. This clause ensures that a defaulting lender does not benefit from the loan arrangement while in default and helps maintain the integrity and fairness of the payment distribution among all parties.