Types of TRIPs and Key Terms
TRIPs can be tailored to meet a vendor's credit protection needs:
There are two types of TRIPs: Prepetition TRIPs and Postpetition TRIPs
- A Prepetition TRIPs is a right to sell a claim against a company that could file for bankruptcy protection.
- A Postpetition TRIPs is a right to sell a claim against a company that is operating under bankruptcy protection and that could wind-down and liquidate.
Below is a description of the salient terms of Credit Suisse's TRIPs:
Claim Purchase Rate:
The rate at which Credit Suisse will purchase the claim upon the occurrence of a Credit Event (almost always 100%).
Covered Period:
The period of time during which the TRIPs covers a vendor's sale of goods and provision of services. The Covered Period can be as short as 3 months to as long as 5 years.
Credit Event:
In the case of a Prepetition TRIPs, a bankruptcy filing of the company. In the case of a Postpetition TRIPs, a Credit Event includes a chapter 7 conversion, a confirmed chapter 11 plan that does not pay administrative creditors in full or court authorized distributions that do not pay administrative creditors in full.
TRIPs Fee:
Typically, a monthly fee between 0.05% and 1.95% of the accounts receivable covered to be paid by a vendor to Credit Suisse. TRIPs Fee payable upon execution if Covered Period is less than 6 months or payable quarterly in advance if Covered Period is greater than 6 months.
