In a project finance transaction, the right of lenders to step-in and perform (or to arrange for a third party to step-in and perform) the obligations of the project sponsor or the project company following a breach by that party under a project agreement (for example, a concession agreement, construction agreement, or offtake agreement). The lenders' ability to step-in ensures the continued operation of the project even if the applicable participant cannot remain in the transaction. Otherwise, the lenders may have to accelerate the project loans, foreclose on the security interests, or terminate the project.

This right is typically set out in a direct agreement with the counterparties to the project agreement in which they acknowledge the lenders' step rights and the conditions and terms on which the lenders may exercise these rights.

For more information on step-in rights, see: