<em>In re Lyondell</em>: District Court Upholds Broad Enforceability of a Limitation of Lender Liability Clause in a Credit Agreement

In re Lyondell: District Court Upholds Broad Enforceability of a Limitation of Lender Liability Clause in a Credit Agreement


By: Julian S.H. Chung, Stewart A. Kagan

Credit agreements by their terms commonly bar the borrower from seeking punitive, indirect, special or consequential damages for a breach of the agreement by lenders and their affiliates. The clauses, as enforced, prevent a borrower from obtaining damages for harm that may be suffered by the borrower's business if the lender wrongfully declines to fund. The clauses shield lenders from exposure to open-ended damages claims if the lenders refuse to lend to a borrower including damages that are the indirect result of the failure to lend.

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