A loss-sharing arrangement whereby participants agree that, in the event of a participant’s inability to settle its obligations (e.g., to cover losses) (i.e., in the case of default), losses will be covered by the other (non-defaulting) participants as determined by all participants under a specific formula.

The non-defaulting participants are known as “survivors” due to their survival as to the event of default over the course of the agreement.

This arrangement is opposite to the so-called “defaulter pays” (as per agreement, losses resulting from a party’s default are borne by the defaulting party).