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A standstill agreement is a temporary arrangement between a borrower and its creditors, excluding trade creditors, designed to give stakeholders time to evaluate their positions. It is viable only if creditors believe they will benefit from a consensual restructuring. Key principles include preventing individual creditors from taking enforcement actions for a set period, freezing exposure from day one, and ensuring all parties share relevant information. The contents of a standstill agreement typically outline the division of new cash from equity, asset sales, or enforcement proceeds, establish a relatively short standstill period that can be extended, and define additional terms.
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