A standstill agreement, also known as a moratorium agreement, is a legal agreement between two parties that temporarily halts certain actions or activities. In Hungarian, a standstill agreement is referred to as “megállapodás a tevékenységek felfüggesztéséről.”
This type of agreement is commonly used in business and commercial transactions to provide a period of time for parties to negotiate a resolution or to allow for further due diligence. During the standstill period, neither party is allowed to engage in certain activities that might negatively impact the other party or the transaction.
One common use of a standstill agreement is in the context of mergers and acquisitions. When a company is considering acquiring another company, it may need time to evaluate the target company`s financial health, legal liabilities, and other factors that may impact the transaction. A standstill agreement can provide a period of time during which the target company agrees not to pursue other buyers or take actions that might harm the acquiring company`s position.
Another common use of a standstill agreement is in the context of loan agreements. A lender may agree to temporarily halt the collection of payments from a borrower if the borrower is experiencing financial difficulty. This provides the borrower with a period of time to get back on track with payments and avoid defaulting on the loan.
Overall, standstill agreements can be a useful tool for parties in a variety of business transactions. By providing a temporary halt to certain activities, these agreements can help parties achieve their goals while minimizing risk and uncertainty. If you are considering entering into a standstill agreement, it is important to work with experienced legal counsel to ensure that your interests are protected.