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Half of the LIIBV advances were more than $100 million, but most
of the bank loans were substantially less than $100 million.
Bank loans were generally for a 5-year period, and no bank loan
had a demand feature. LIIBV advances were generally not limited
to a fixed period and generally had demand features. LIIBV
generally did not require petitioners to make quarterly or
semiannual payments of principal, but did allow balloon payments.
Banks required quarterly or semiannual payments of principal and
did not allow balloon payments. Banks required minimum debt to
equity and current assets to current liabilities ratios. LIIBV
generally did not.
The guaranties differed in that the banks required the
guarantors to post collateral and to meet financial requirements.
LIIBV did not.
Only bank loans had negative covenants that limited the use
of the borrowed funds, or placed limitations on a change of the
borrower's business or on asset dispositions. LIIBV advances did
not. Bank loans generally had more covenants and warranties
relating to the borrower's legal status and activities (e.g.,
compliance with ERISA and securities laws) than LIIBV advances.
Banks treated material adverse changes in the borrower's
operations or financial condition, certain judgments, and
liquidation, dissolution, or winding up of the borrower's
business as events of default. LIIBV did not.
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