Contracts of Inattention

Bloomberg’s multi-talented Matt Levine recently wrote:

One of my favorite recent stories in bond documents is the one about how private equity firms changed a sentence in bond documents, which usually says that companies can’t make restricted payments if “a Default or Event of Default shall have occurred,” to instead say that they can’t make the payments if “an Event of Default shall have occurred.” (here)

As Robert Smith of the Financial Times (quoted in Levine’s piece) explains:

To a layman, [the foregoing likely] sounds the same. But there is an incredibly important distinction.

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