26.2.1 It could be argued that to the extent the Senior Lenders "step-in" (i.e. obtain rights under the Contract) then they should be liable for obligations to the same extent as the Contractor. On some early projects this led to the development of "step-in undertakings", under which Senior Lenders agreed to accept a degree of liability (invariably capped) as the price of their attempt to save the Project.
26.2.2 Other projects attempted to follow more closely the then existing structure for insolvencies and work-outs in the UK, namely that of an administrative receivership appointment and sale, on the basis that the interests of all parties were best served by following a well established procedure that allows an entity to be appointed to take over the decision making rights of the Contractor without immediately being forced to sign up to either a limited quantified or unlimited liability.
26.2.3 A standard approach has now been developed, to the effect that the Senior Lenders should be given an opportunity to rectify any defaults and maximise any realisation without having to provide a "step-in undertaking" to the Authority. This approach is very closely linked to the approach taken in Section 23.2 (Termination on Contractor Default) as if the situation worsens to a sufficient degree (e.g. claims arise) during the Senior Lenders' period of "step-in", the Authority may terminate the Contract and such liability will be reflected in the termination compensation payable to the Contractor.