Merrill Lynch Ruling Impacts CDS Agreements

August 13, 2008
In Merrill Lunch Int’l, Merrill Lynch & Co. v. XL Capital Assurance Inc., XCLA Admin LLC, the United States District Court determined that a credit protection buyer had not repudiated its contractual obligations under a credit default swap (“CDS”) agreement, thereby permitting the credit protection seller to terminate the CDS. This update examines the court’s decision and its potential impact on future cases regarding CDS agreements.