A lender step-in right is a contractual right granted to project finance lenders to assume control of the project — either directly or through a new entity — in the event of a borrower default, in order to prevent the termination of the concession agreement or PPA and preserve the value of the lenders’ security. Step-in rights are typically negotiated directly with the project authority (the government counterparty) through a direct agreement, under which the project authority agrees not to terminate the project contract without first giving the lenders an opportunity to cure the default.
