40.18  Economic Test42

If the Facilities are destroyed or substantially destroyed in a single event and the insurance proceeds (when taken together with any other funds available to the Service Provider) are equal to or greater than the amount required to repair or reinstate the Facilities, then the following provisions shall apply:

(a)  the Service Provider shall calculate [the senior debt loan life cover ratio] as used in the Base Case (on the assumption that the Facilities are repaired or reinstated in accordance with clause 40.18(c));

(b)  if the calculation referred to in clause 40.18(a) shows that the [senior debt loan life cover ratio] is greater than or equal to [Event of Default level] then the Service Provider shall be subject to the procedure set out in clause 40.17;

(c)  if the calculation referred to in clause 40.18(a) shows that the [senior debt loan life cover ratio] is less than [Event of Default level] then an amount equal to the lesser of:

(i)  the insurance proceeds; and

(ii)  the Base Senior Debt Termination Amount, or, if any Additional Permitted Borrowing has been advanced, the Revised Senior Debt Termination Amount,

shall be released from the Joint Insurance Account to the Service Provider;

(d)  if, pursuant to clause 40.18(c), insurance proceeds are released form the Joint Insurance Account the Service Provider shall be in breach of its obligations under this Agreement (and shall not pursuant to clause 35 (Relief Events) be relieved of its obligations unless it can demonstrate, to the satisfaction of the Authority, that it can carry out the works necessary to repair, reinstate or replace the Facilities which are subject to the relevant claims in accordance with clause 40.17 and within a reasonable timescale.

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42  The clause may not be relevant if there are various Social Services Facilities which are geographically spread or (in cases where there is only one Asset) where there is a low risk of the total destruction of the Asset.  Authorities should refer to the SoPC guidance current of their project for further information and guidance.  Not used in NHS Standard form.