25.1.2 What constitutes a Default Termination Event?
(a) The specific events that will be categorised as Default Termination Events will be determined on a project by project basis but will typically include:
(i) the works not being commenced within a specified period after Financial Close (alternatively, jurisdictions may consider categorising this event as an Event of Default);
(ii) the private party wholly or substantially abandoning the works, the facility or the provision of the services, or displaying an intention to do so;
(iv) a Persistent Breach;
(v) the occurrence of an Insolvency Event109 in relation to the private party;
(vi) the occurrence of an Insolvency Event in respect of any member of the private party group,110 or material sub-contractor or any guarantor, and that member of the private party group or guarantor is not replaced within a specified period111 of the Insolvency Event by a party which is reputable, solvent and has the resources and experience to perform its obligations under the relevant sub-contracts or guarantee (as applicable);
(vii) where the private party assigns, transfers or otherwise disposes of any of its rights under the project agreement without the consent of government (other than in the permitted circumstances set out in section 34.3.1 of Chapter 34 (Restrictions on private party)) or, depending on the nature of the project, where a specified major sub-contractor disposes of their interest in the relevant sub-contract;
(viii) a breach of the change of ownership/control provisions112 of the project agreement (but in some jurisdictions this is limited to breach in respect of private party Change in Control only);
(ix) Completion not having occurred by the Sunset Date, or government or an independent expert reasonably forming the view that the private party will not achieve Completion by the Sunset Date;
(x) an Illegality Event has occurred;
(xi) a specified cap or a specified percentage of the cap being reached in respect of any performance bonds or parent company guarantees provided to government as required under the project agreement, or any such bond or guarantee ceasing to be valid without, in each case, rectification or replacement within a specified period;
(xii) government directing the private party not to reinstate or repair damage where the relevant damage was caused by a private party default;
(xiii) where performance points accumulated over a fixed period (i.e. due to a series of Service Failures) exceed a specified level; and
(xiv) the private party suffering abatements over a specified number of consecutive months, which in value equate to an amount which is at or above a specified percentage of the total services fee.
(b) Jurisdictions have the flexibility of adopting or not adopting some or all of the Default Termination Events listed above. On certain projects government may also include additional Default Termination Events but only where this is warranted by the unique features of the relevant Project.113
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109 Cure periods will not be allowed for, other than in respect of an application for winding up.
110 See section 29.1 of Chapter 29 (Change of ownership/control) for what constitutes the private party group.
111 This is traditionally 60 business days.
112 See Chapter 29 (Change of ownership/control).
113 For example, the government may or may not opt to treat failure to insure (subject to section 23.4 of Chapter 23 (Insurance) on uninsurability) as a Termination Event, depending on the particular attributes, requirements and risks of the project.