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IFRS 16 – Changes that impact borrowers and lenders are coming to Canada - Are you ready?

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Sep 06, 2018

On September 6, 2018, Cassels Brock Lawyers published an article on the impact of IFRS 16 on loan agreements.

Considerations that both the borrowers and lenders need to take include:

  • The most apparent effect of the new IFRS 16 will be on a borrower’s financial ratios in their loan agreements. Any ratios that utilize these terms, including asset turnover ratios, debt-to-equity ratios, current ratios and EBTIDA metrics, all which are common financial covenants in loan agreements, will also be impacted and should be tested in light of IFRS 16 treatment.
  • Borrowers should consider whether they will be able to meet their financial covenants as currently contemplated and they should consider working with their lenders to amend loan agreements to deal with the implementation of IFRS 16.
  • Lenders will need to consider if their current lending documents adequately deal with the changes that IFRS 16 will bring.

Review the full article on Cassels Brock Lawyers' website.

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