130 4 Debt
ciple is complemented by “sharing”. Funds repaid by the borrower to a bank in
excess of that bank’s share of the loan may have to be “shared” by all banks. Shar-
ing is typically applied to all forms of repayment like “direct payment by the bor-
rower”, “set-off”, and “proceeds of litigation”.
For the borrower, one of the purposes of the sharing clause is to protect the bor-
rower against rogue members of the syndicate.^227
A sharing clause might begin like this: “Redistribution of payments. If, at any time, the
proportion which any Bank (a ‘Recovering Bank’) has received or recovered (whether by
payment, the exercise of a right of set-off or combination of accounts or otherwise) in re-
spect of its portion of any payment (a ‘relevant payment’) to be made under this Agreement
by the Borrower for account of that Recovering Bank and one or more other Banks is
greater (the amount of that excess being called in this Clause an ‘excess amount’) than the
proportion thereof received or recovered by the Bank or Banks receiving or recovering the
smallest proportion thereof, then: that Recovering Bank shall pay to the Agent an amount
equal to that excess amount ...”
(^227) See Buchheit LC, How to Negotiate Eurocurrency Loan Agreements. Euromoney Publi-
cation, London (1995) p 74.