26. As part of its refinancing proposal a Contractor may suggest a new funding arrangement that impacts on termination liabilities. However, it is important to remember that the decision to accept an increase in termination liabilities is quite separate to any agreement to refinance; it is perfectly feasible for the investor to realise a gain (albeit smaller) with no change to the termination liabilities of the MOD.
27. Compensation is payable to the Contractor in any of three broad categories - contractor default, authority voluntary termination and force majeure. The Department needs establish that any increase in termination liabilities is more than compensated for by the gain it receives as part of the refinancing.