equity squeeze

equity squeeze
USA
This term, related to the lenders' step-in right, is used in project financing and equipment financing and refers to provisions in the loan documents that allow the lenders to foreclose on the security interests granted by the stockholder in the equity interests of the borrower without foreclosing on the security interests granted by the borrower in the assets of the borrower. An equity squeeze removes the stockholder of the borrower or the project company from the project while allowing the project to continue.
For more information on project finance transactions, see Practice Note, Project Finance: Overview (www.practicallaw.com/7-382-7004) and Project Finance Checklist (www.practicallaw.com/9-500-4687).

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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