Solvency clause: Copy, customize, and use instantly
Introduction
A solvency clause ensures that the parties involved in the agreement are financially stable and able to meet their obligations. This clause often includes warranties from each party regarding their ability to pay debts and perform under the terms of the agreement. It helps to mitigate the risk of non-performance due to financial instability, providing assurance to both parties.
Below are templates for solvency clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Basic solvency clause
This is a standard solvency clause for general use.
The [Party] warrants that it is solvent and has the ability to meet its financial obligations under this Agreement. The [Party] further represents that, as of the date of this Agreement, it has no outstanding liabilities or debts that would impair its ability to fulfill the terms of this Agreement.
Solvency clause with material adverse change provision
This variation adds a material adverse change provision.
The [Party] warrants that it is solvent and able to meet its financial obligations under this Agreement. If, at any time during the term of this Agreement, a material adverse change occurs in the financial condition of the [Party], the [Party] agrees to promptly notify the other party and take necessary actions to remedy the situation to maintain solvency.
Solvency clause with bankruptcy provision
This clause includes a provision related to bankruptcy.
The [Party] represents that it is not subject to any bankruptcy, insolvency, or similar proceeding under applicable law. The [Party] agrees that if any bankruptcy, insolvency, or receivership proceedings are initiated against it during the term of this Agreement, it will promptly notify the other party and cooperate fully to mitigate any adverse impacts on the Agreement.
Solvency clause with representation of financial health
This clause requires a representation of financial health.
The [Party] represents that it is financially sound and capable of meeting its obligations under this Agreement. This includes the ability to generate sufficient income and maintain adequate cash flow to perform its duties and responsibilities in full, without the need for additional financing or restructuring.
Solvency clause with debt disclosure requirement
This clause requires the disclosure of outstanding debts.
The [Party] warrants that it has no undisclosed debts or obligations that would affect its ability to perform under this Agreement. The [Party] agrees to disclose any significant outstanding liabilities or debt obligations that may affect its solvency upon request from the other party.
Solvency clause with provision for financial reporting
This clause specifies financial reporting requirements.
The [Party] agrees to provide the other party with periodic financial reports, including balance sheets and income statements, to demonstrate its continued solvency and ability to meet obligations under this Agreement. These reports shall be provided on an annual or quarterly basis, or as otherwise requested.
Solvency clause with financial audit requirement
This clause includes a requirement for a financial audit.
The [Party] agrees to undergo a financial audit conducted by an independent third-party auditor at least once annually and provide the results of such audits to the other party. The audit will confirm the [Party]'s solvency and ability to fulfill its obligations under this Agreement.
Solvency clause with condition for early termination
This clause links solvency to early termination conditions.
In the event that either party experiences a significant decline in solvency or financial condition, the other party may terminate this Agreement with immediate effect. The party experiencing financial difficulty must provide written notice of its solvency status and any adverse financial developments that could impair its performance under the Agreement.
Solvency clause with cross-default provision
This clause includes a cross-default provision.
If the [Party] defaults on any other contractual obligation or financial commitment outside of this Agreement, such default shall constitute a breach of this Agreement. The [Party] agrees that a default, insolvency, or financial instability in any other contract will trigger a default under this Agreement as well.
Solvency clause with representation of debt-to-equity ratio
This clause requires a representation of debt-to-equity ratio.
The [Party] warrants that its debt-to-equity ratio is within the acceptable limits set forth by its financial policies or any applicable regulatory body. The [Party] agrees to maintain this ratio throughout the term of this Agreement and notify the other party immediately if the ratio exceeds the agreed threshold.
Solvency clause with provision for financial restructuring
This clause allows for financial restructuring.
The [Party] agrees to notify the other party in the event of any financial restructuring, including the restructuring of its debts or equity. The [Party] further agrees to take all necessary steps to ensure that the restructuring does not negatively impact its solvency or ability to perform under this Agreement.
Solvency clause with termination rights for insolvency
This clause provides termination rights in case of insolvency.
If the [Party] becomes insolvent or unable to pay its debts as they come due, the other party shall have the right to terminate this Agreement immediately. The [Party] agrees to notify the other party promptly of any event that would trigger this right of termination.
Solvency clause with solvency covenant
This clause includes a solvency covenant.
The [Party] agrees to a solvency covenant that requires it to maintain a positive net worth and be able to meet its financial obligations under this Agreement at all times. If at any point the [Party]'s financial condition falls below the covenant threshold, the other party may seek to terminate or renegotiate the terms of the Agreement.
Solvency clause with restrictions on further debt issuance
This clause restricts further debt issuance.
The [Party] agrees not to incur any additional debt or obligations that would negatively impact its solvency without the prior written consent of the other party. Any further debt issuance or restructuring that may affect the [Party]’s ability to perform under this Agreement must be disclosed and approved.
Solvency clause with guarantee of financial resources
This clause provides a guarantee of financial resources.
The [Party] guarantees that it will have sufficient financial resources, either through cash flow, financing, or other sources, to fulfill its obligations under this Agreement. If the [Party] anticipates any financial difficulty, it agrees to inform the other party and take corrective actions to maintain solvency.
Solvency clause with indemnification for financial instability
This clause includes indemnification provisions for financial instability.
The [Party] agrees to indemnify and hold harmless the other party from any losses, damages, or expenses incurred due to the [Party]’s financial instability or insolvency. This includes any failure to meet obligations or any claims resulting from the [Party]’s inability to fulfill its commitments.
Solvency clause with confirmation of liquidity
This clause requires a confirmation of liquidity.
The [Party] confirms that it has sufficient liquidity to meet its obligations under this Agreement. The [Party] shall provide evidence of its liquidity upon request, and shall notify the other party promptly if there are any concerns regarding its ability to meet payment obligations.
Solvency clause with covenant for financial viability
This clause requires a covenant for financial viability.
The [Party] covenants to maintain its financial viability and to remain solvent for the entire duration of this Agreement. The [Party] agrees to provide financial statements and reports to demonstrate its ongoing financial stability as required by the other party.
Solvency clause with prohibition on asset transfers
This clause prohibits asset transfers.
The [Party] agrees not to transfer any significant assets or liabilities that would negatively impact its solvency during the term of this Agreement. Any transfer of assets that could impair the [Party]’s ability to meet its obligations under this Agreement must be disclosed and approved in advance.
Solvency clause with automatic review upon financial distress
This clause calls for an automatic review in case of financial distress.
If the [Party] experiences any form of financial distress, including a significant decline in solvency or liquidity, this Agreement shall automatically be subject to review. Both parties agree to renegotiate the terms of the Agreement to reflect the changed financial circumstances.
Solvency clause with notification of insolvency proceedings
This clause requires notification of insolvency proceedings.
The [Party] agrees to notify the other party immediately if it becomes involved in any insolvency proceedings, including bankruptcy, liquidation, or receivership. This notification shall include the status of the proceedings and the impact on the performance of this Agreement.
Solvency clause with affirmative financial solvency declaration
This clause includes a financial solvency declaration.
The [Party] affirms that it is solvent and has the necessary financial resources to perform all of its obligations under this Agreement. This declaration is made as of the date of this Agreement, and the [Party] agrees to notify the other party immediately if its solvency status changes.
Solvency clause with cross-default trigger
This clause includes a cross-default trigger.
If the [Party] defaults under any other agreement or financial commitment, it shall constitute a default under this Agreement as well. The [Party] agrees to inform the other party immediately if a cross-default event occurs that could impair its ability to perform under this Agreement.
Solvency clause with provision for periodic financial updates
This clause requires periodic updates on financial conditions.
The [Party] agrees to provide the other party with regular updates on its financial condition, including balance sheets, income statements, and cash flow reports. These updates will be provided quarterly or at any other agreed interval to ensure that the [Party] remains solvent throughout the duration of this Agreement.
Solvency clause with early warning system for financial distress
This clause includes an early warning system.
The [Party] agrees to implement an early warning system to notify the other party of any financial distress that could affect its solvency. This system will provide immediate notice of financial difficulties, including liquidity issues, significant debt accumulation, or insolvency proceedings.
Solvency clause with solvency monitoring rights
This clause grants the right to monitor solvency.
The [Party] agrees to grant the other party the right to monitor its solvency during the term of this Agreement. The [Party] will provide access to financial records and reports that confirm its ability to meet obligations, including any third-party audits requested by the other party.
Solvency clause with waiver of liability for insolvency
This clause includes a waiver for liability in case of insolvency.
The [Party] acknowledges that in the event of its insolvency, the other party shall not be liable for any failure to perform under this Agreement. The [Party] agrees to release the other party from any claims or damages arising from the insolvency event that prevents performance.
Solvency clause with right to renegotiate terms upon insolvency
This clause grants the right to renegotiate terms.
In the event of insolvency, the [Party] agrees to renegotiate the terms of this Agreement with the other party. This renegotiation will aim to adjust the obligations of the insolvent party to reflect its financial condition, including payment schedules or delivery timelines.
Solvency clause with guarantee of no insolvency proceedings
This clause guarantees no insolvency proceedings.
The [Party] guarantees that no insolvency, bankruptcy, or similar proceedings have been filed or are pending against it. The [Party] further agrees that it will not initiate or allow any insolvency proceedings during the term of this Agreement without the prior written consent of the other party.
Solvency clause with provision for collateral in case of insolvency
This clause provides collateral in case of insolvency.
The [Party] agrees to provide collateral to the other party to secure its performance under this Agreement in the event of insolvency. The collateral will be in the form of [assets or security interests] and will be made available immediately upon request to protect the other party's interests.
Solvency clause with continued solvency requirement for performance
This clause requires continued solvency for performance.
The [Party] agrees to maintain solvency and demonstrate its ability to perform under this Agreement. Should the [Party] experience a decline in solvency that impairs its ability to perform, the other party reserves the right to suspend performance or terminate this Agreement.
Solvency clause with responsibility for any solvency-related claims
This clause assigns responsibility for solvency-related claims.
The [Party] agrees to bear full responsibility for any claims or legal actions arising from its insolvency. The [Party] shall indemnify the other party for any losses, costs, or damages resulting from its inability to meet the obligations set forth in this Agreement due to insolvency.
Solvency clause with obligation to provide solvency certificates
This clause requires solvency certificates.
The [Party] agrees to provide a solvency certificate, issued by a licensed financial professional, upon request from the other party. This certificate will confirm the [Party]’s financial standing and ability to meet its obligations under this Agreement.
Solvency clause with solvency reporting obligations upon financial distress
This clause requires reporting during financial distress.
In the event of financial distress or a material change in solvency, the [Party] agrees to report its financial condition to the other party within [X] business days. This report will include a detailed explanation of the financial distress and the steps being taken to remedy the situation.
Solvency clause with obligations for debt restructuring during insolvency
This clause requires debt restructuring during insolvency.
The [Party] agrees to immediately inform the other party if it becomes necessary to restructure its debts in the event of insolvency. The [Party] will take all necessary actions to restructure its debts in a manner that preserves its ability to perform under this Agreement, ensuring minimal impact on the other party’s interests.
Solvency clause with restriction on liability due to insolvency
This clause limits liability in case of insolvency.
The [Party] shall not be liable for any failure to perform under this Agreement caused by its insolvency, provided it notifies the other party in writing within [X] days of becoming aware of its insolvency status. However, this limitation on liability will not affect any accrued obligations up to the date of insolvency.
Solvency clause with obligation to maintain debt covenants
This clause requires maintaining debt covenants.
The [Party] agrees to comply with all applicable debt covenants related to its outstanding debts. The [Party] shall provide evidence of compliance with these covenants to the other party upon request, and any breach of such covenants that may impact solvency must be promptly disclosed.
Solvency clause with solvency declaration upon contract renewal
This clause requires a solvency declaration upon contract renewal.
Upon the renewal or extension of this Agreement, the [Party] agrees to provide a solvency declaration confirming that it remains financially solvent and capable of meeting its obligations. This declaration will be a condition for renewing the Agreement.
Solvency clause with provision for default upon insolvency
This clause includes default provisions for insolvency.
In the event that the [Party] becomes insolvent, the other party may immediately consider the Agreement to be in default and take appropriate action, including termination of the Agreement, recovery of unpaid amounts, or any other remedies available under applicable law.
Solvency clause with guarantee of solvency during contract performance
This clause guarantees solvency during the contract term.
The [Party] guarantees that it will remain solvent throughout the term of this Agreement. The [Party] further agrees to provide financial updates to the other party as requested, confirming its continued ability to perform all obligations under the Agreement.
Solvency clause with right to terminate upon insolvency
This clause grants the right to terminate upon insolvency.
If the [Party] becomes insolvent or enters into bankruptcy proceedings during the term of this Agreement, the other party reserves the right to terminate this Agreement with immediate effect. The [Party] agrees to notify the other party promptly if insolvency proceedings are initiated against it.
Solvency clause with cross-collateral requirement for solvency maintenance
This clause includes a cross-collateral provision.
The [Party] agrees to maintain its solvency by providing cross-collateral or other forms of security to the other party to secure performance under this Agreement. The collateral will be subject to adjustment in the event of any material changes in the financial condition of the [Party].
Solvency clause with indemnity for solvency-related non-performance
This clause includes an indemnity for non-performance due to insolvency.
The [Party] agrees to indemnify the other party for any losses or damages incurred as a result of its insolvency or financial instability, which leads to its failure to perform any obligations under this Agreement. The indemnity will cover any direct or indirect consequences of non-performance due to insolvency.
Solvency clause with notice of solvency breach
This clause requires notice of solvency breaches.
The [Party] agrees to notify the other party immediately if it is unable to meet its financial obligations or if there is any event that may cause it to become insolvent. This notice will include an explanation of the breach and any actions taken to remedy the situation.
Solvency clause with a requirement for solvency guarantees from third parties
This clause includes third-party solvency guarantees.
The [Party] agrees to provide a solvency guarantee from a third-party financial institution or surety if it is unable to provide sufficient assurance of its solvency. The guarantee will cover the [Party]'s obligations under this Agreement and will be available to the other party upon request.
Solvency clause with payment adjustments based on solvency
This clause requires payment adjustments based on solvency.
If the [Party] experiences any decline in solvency, the parties agree to negotiate adjustments to the payment terms under this Agreement. These adjustments may include changes to payment schedules or amounts, based on the financial condition of the [Party].
Solvency clause with solvency audit upon financial distress
This clause provides for a solvency audit during financial distress.
In the event of financial distress, the [Party] agrees to undergo a solvency audit conducted by an independent auditor chosen by the other party. The audit will assess the [Party]'s ability to meet its obligations under this Agreement, and the results will be shared with both parties to determine the next steps.
Solvency clause with provision for performance bonds
This clause includes a performance bond requirement.
The [Party] agrees to provide a performance bond to the other party to ensure the performance of its obligations under this Agreement in the event of insolvency. The performance bond will be held as collateral and will be used to cover any non-performance due to insolvency.
Solvency clause with provision for financial distress reporting
This clause requires financial distress reporting.
The [Party] agrees to promptly notify the other party if it is unable to meet its financial obligations due to a financial distress event. This notification shall include an explanation of the cause of distress and the actions taken to resolve the situation.
Solvency clause with limitation on debt accumulation
This clause limits debt accumulation.
The [Party] agrees not to incur any additional debt or liabilities that could jeopardize its solvency without the prior written consent of the other party. Any additional debt incurred must not exceed [X] percentage of its existing liabilities.
Solvency clause with solvency breach notification requirement
This clause specifies the requirement for solvency breach notification.
The [Party] agrees to notify the other party immediately if it experiences a breach of solvency, including any situation where it is unable to pay its debts as they become due. The notification must include details of the breach and any actions being taken to address it.
Solvency clause with guarantee from parent company
This clause includes a solvency guarantee from the parent company.
The [Party] agrees to provide a solvency guarantee from its parent company, ensuring that its financial condition will remain stable throughout the duration of this Agreement. The parent company guarantees the [Party]’s performance and ability to meet all financial obligations under this Agreement.
Solvency clause with early termination rights in case of insolvency
This clause provides early termination rights in case of insolvency.
In the event that the [Party] becomes insolvent or experiences a significant decline in solvency, the other party shall have the right to terminate this Agreement immediately. The terminating party will be entitled to compensation for any damages incurred due to early termination.
Solvency clause with solvency compliance certification
This clause requires solvency compliance certification.
The [Party] agrees to provide a solvency compliance certificate annually, certifying that it is financially capable of meeting its obligations under this Agreement. This certificate will be issued by a certified public accountant or financial auditor.
Solvency clause with solvency review during the contract term
This clause allows for a solvency review during the contract term.
The [Party] agrees to undergo a solvency review during the term of this Agreement, conducted by the other party or a third-party auditor. If the review reveals that the [Party] is not solvent, the other party has the right to renegotiate the terms or terminate the Agreement.
Solvency clause with provision for financial restructuring
This clause addresses financial restructuring.
In the event of financial distress, the [Party] agrees to restructure its financial obligations, including debt restructuring or other financial adjustments, to ensure continued solvency and the ability to meet its obligations under this Agreement.
Solvency clause with debt-to-equity ratio disclosure
This clause requires the disclosure of debt-to-equity ratio.
The [Party] agrees to disclose its debt-to-equity ratio to the other party upon request. This ratio will help the other party assess the [Party]'s financial stability and ability to perform under the terms of this Agreement.
Solvency clause with provision for insolvency insurance
This clause includes insolvency insurance provisions.
The [Party] agrees to maintain insolvency insurance or similar financial coverage to mitigate the risk of insolvency during the term of this Agreement. The [Party] will provide proof of such coverage to the other party on request.
Solvency clause with solvency breach remedies
This clause provides remedies for solvency breaches.
In the event that the [Party] breaches its solvency obligations under this Agreement, the other party has the right to seek remedies, including but not limited to termination of the Agreement, recovery of losses, or renegotiation of payment terms to reflect the [Party]’s financial condition.
Solvency clause with compliance with solvency covenants
This clause ensures compliance with solvency covenants.
The [Party] agrees to comply with all solvency covenants and to maintain solvency throughout the term of this Agreement. If the [Party] fails to comply with these covenants, the other party has the right to suspend performance or terminate the Agreement.
Solvency clause with right to terminate for bankruptcy filings
This clause grants termination rights for bankruptcy filings.
If the [Party] files for bankruptcy or becomes the subject of a bankruptcy petition, the other party may immediately terminate this Agreement. The termination rights will apply regardless of the outcome of the bankruptcy proceeding, and any performance obligations will be deemed void.
Solvency clause with payment schedule adjustments due to insolvency
This clause adjusts the payment schedule due to insolvency.
If the [Party] becomes insolvent, the parties agree to adjust the payment schedule under this Agreement. This may include extended payment terms, reduced payments, or other modifications that reflect the [Party]'s financial capacity.
Solvency clause with requirement for monthly solvency updates
This clause requires monthly solvency updates.
The [Party] agrees to provide the other party with monthly updates on its solvency, including financial health reports and liquidity statements. These updates will allow the other party to monitor the [Party]’s ability to meet its obligations.
Solvency clause with commitment to maintain adequate reserves
This clause ensures the maintenance of adequate reserves.
The [Party] agrees to maintain adequate financial reserves to ensure that it can meet its obligations under this Agreement. If at any point the reserves fall below the required threshold, the [Party] will take immediate action to remedy the situation and notify the other party.
Solvency clause with automatic default on insolvency
This clause triggers automatic default upon insolvency.
If the [Party] becomes insolvent, it will be considered an automatic default under this Agreement. In such an event, the other party has the right to terminate the Agreement immediately without further obligation or penalty.
Solvency clause with solvency-based performance bond requirement
This clause requires a performance bond based on solvency.
The [Party] agrees to provide a performance bond to the other party, the amount of which will be determined by its solvency status. If the [Party]’s solvency declines, the amount of the bond may be adjusted to reflect the financial condition of the [Party].
Solvency clause with financial guarantee from a third party
This clause includes a third-party financial guarantee.
The [Party] agrees to provide a financial guarantee from a third-party guarantor, ensuring that it remains solvent and able to meet its obligations under this Agreement. The guarantor must be approved by the other party and will be responsible for covering any default or insolvency by the [Party].
Solvency clause with financial stability test upon contract renewal
This clause includes a financial stability test upon renewal.
Prior to renewing this Agreement, the [Party] must undergo a financial stability test to demonstrate its ability to meet ongoing obligations. The other party reserves the right to refuse renewal if the [Party] fails to meet the solvency requirements established in the test.
Solvency clause with notification of non-payment risk
This clause requires notification of non-payment risk.
If the [Party] foresees a risk of non-payment due to solvency issues, it agrees to notify the other party immediately. The notification must include a detailed plan to address the payment risk, along with a timeline for remedying the issue.
Solvency clause with payment suspension upon solvency failure
This clause allows payment suspension if solvency fails.
If the [Party] fails to maintain solvency, the other party has the right to suspend all payments under this Agreement until the [Party] has remedied its solvency issues and provided proof of financial stability.
Solvency clause with solvency requirements for key personnel
This clause ties solvency to key personnel.
The [Party] agrees to maintain the solvency of key personnel who are critical to the performance of this Agreement. If any key personnel’s financial stability is at risk, the [Party] agrees to notify the other party and provide a plan for addressing any impact on the Agreement.
Solvency clause with collateralization of obligations
This clause requires collateralization of obligations.
In the event of a solvency concern, the [Party] agrees to collateralize its obligations under this Agreement with assets sufficient to cover the value of the Agreement. The collateral will be held in escrow and can be accessed by the other party if the [Party] defaults due to insolvency.
Solvency clause with right to audit solvency status
This clause provides the right to audit solvency.
The [Party] agrees to allow the other party to audit its solvency status at any time during the term of this Agreement. The audit will include a review of the [Party]’s financial statements, debt obligations, and liquidity to ensure that it remains solvent and able to meet its obligations.
Solvency clause with provision for alternate payment arrangements
This clause allows for alternate payment arrangements if solvency is at risk.
If the [Party] becomes financially unstable, the parties agree to establish alternate payment arrangements to ensure that the [Party] can still fulfill its obligations under this Agreement. These alternate terms may include extended payment periods, partial payments, or deferred payment options until the [Party]'s solvency is restored.
Solvency clause with disclosure of off-balance-sheet liabilities
This clause requires the disclosure of off-balance-sheet liabilities.
The [Party] agrees to disclose any off-balance-sheet liabilities, including contingent liabilities, obligations, or debts that could affect its solvency. The disclosure must include full details of such liabilities, and the [Party] agrees to provide this information upon request from the other party.
Solvency clause with monitoring of solvency by third-party experts
This clause includes monitoring by third-party experts.
The [Party] agrees to have its solvency status monitored by third-party financial experts at regular intervals during the term of this Agreement. The results of these evaluations will be shared with the other party to ensure transparency and ongoing solvency throughout the Agreement.
Solvency clause with adjustment of terms upon insolvency
This clause allows adjustment of terms if solvency is affected.
In the event that the [Party] becomes insolvent, the terms of this Agreement may be adjusted to reflect the financial condition of the [Party]. This may include changes to the payment schedule, delivery timelines, or other key provisions to accommodate the [Party]'s inability to perform as originally agreed.
Solvency clause with financial performance indicators
This clause requires the use of financial performance indicators.
The [Party] agrees to maintain certain financial performance indicators, such as a specified debt-to-equity ratio, profitability levels, and liquidity measures, to demonstrate solvency. The [Party] will provide periodic updates on these indicators, and failure to meet the agreed-upon thresholds may trigger renegotiation or termination of the Agreement.
Solvency clause with obligation to notify of financial deterioration
This clause requires immediate notification of financial deterioration.
The [Party] agrees to immediately notify the other party if there is any deterioration in its financial condition that could impair its ability to meet the obligations under this Agreement. This includes, but is not limited to, a decline in cash flow, an increase in liabilities, or any bankruptcy proceedings.
Solvency clause with termination rights in case of financial failure
This clause provides termination rights in case of financial failure.
In the event that the [Party] fails to remain solvent, the other party has the right to terminate this Agreement immediately. This right to terminate will be exercised upon the [Party]’s failure to demonstrate solvency or to take corrective action to restore solvency within [X] days of notice.
Solvency clause with mandatory insolvency risk insurance
This clause requires insolvency risk insurance.
The [Party] agrees to maintain insolvency risk insurance to protect the other party in the event of financial failure or insolvency. The insurance policy will cover any potential losses incurred by the other party as a result of the [Party]'s inability to fulfill its obligations under this Agreement.
Solvency clause with regular solvency checks
This clause provides for regular solvency checks.
The [Party] agrees to undergo regular solvency checks every [X] months during the term of this Agreement. These checks will involve an audit of financial statements, liquidity ratios, and debt levels, and the results will be shared with the other party to ensure ongoing solvency.
Solvency clause with provision for funding if solvency is threatened
This clause specifies the provision of funding if solvency is threatened.
If the [Party]’s solvency is threatened due to financial difficulties, it agrees to secure funding from third-party sources or through internal reserves to restore its ability to meet the obligations under this Agreement. The [Party] will provide the other party with documentation of the funding arrangements.
Solvency clause with requirement for emergency financial plan
This clause requires an emergency financial plan.
The [Party] agrees to maintain an emergency financial plan that outlines steps to be taken if its solvency is at risk. This plan will include strategies for securing additional funding, reducing liabilities, or restructuring debt and will be provided to the other party upon request.
Solvency clause with the provision of credit ratings
This clause requires providing credit ratings.
The [Party] agrees to provide the other party with its current credit rating as issued by a recognized credit rating agency. If the credit rating falls below a certain threshold, the other party reserves the right to request additional guarantees or take corrective action.
Solvency clause with right to renegotiate in case of liquidity problems
This clause allows renegotiation in case of liquidity issues.
If the [Party] faces liquidity problems that may impact its ability to meet its obligations under this Agreement, the parties agree to renegotiate the terms of the Agreement. This may include adjusting payment schedules or other terms to accommodate the [Party]'s financial situation.
Solvency clause with assurance of liquidity maintenance
This clause requires maintaining liquidity.
The [Party] agrees to maintain sufficient liquidity throughout the term of this Agreement to meet its obligations as they become due. If liquidity falls below an agreed threshold, the [Party] agrees to take immediate steps to improve its liquidity and notify the other party of any corrective actions taken.
Solvency clause with provision for additional guarantees
This clause provides for additional guarantees in case of solvency issues.
The [Party] agrees to provide additional guarantees, including personal or corporate guarantees, to secure its performance under this Agreement in the event of any solvency issues. These guarantees will be provided to the other party upon request and will be enforced if the [Party] fails to maintain solvency.
Solvency clause with control over dividend distribution
This clause restricts dividend distribution.
The [Party] agrees not to distribute dividends or make any similar payments to shareholders or partners if such distribution would negatively impact its solvency. The [Party] will maintain sufficient capital and liquidity to ensure continued performance under this Agreement.
Solvency clause with third-party financial oversight
This clause includes third-party financial oversight.
The [Party] agrees to submit to financial oversight by an independent third party, such as a financial auditor or advisory firm, to ensure that it remains solvent and capable of fulfilling its obligations under this Agreement. The results of these oversight activities will be shared with the other party.
Solvency clause with provision for liquidity covenants
This clause sets liquidity covenants.
The [Party] agrees to comply with liquidity covenants, including maintaining a minimum cash reserve or liquid assets sufficient to cover its obligations under this Agreement. The [Party] will provide quarterly liquidity reports to the other party to confirm compliance with these covenants.
Solvency clause with notice of negative financial trends
This clause requires notification of negative financial trends.
The [Party] agrees to notify the other party if it detects any negative financial trends, such as declining revenues, increasing debt, or decreasing profitability, that could affect its solvency. The notification shall be made within [X] days of identifying such trends and shall include any actions being taken to address the issues.
Solvency clause with repayment of debts in case of insolvency
This clause requires repayment of debts in case of insolvency.
In the event of insolvency, the [Party] agrees to prioritize the repayment of debts owed to the other party under this Agreement. The [Party] will take necessary steps to settle all outstanding obligations to avoid any adverse impact on the other party’s interests.
Solvency clause with obligation to preserve assets
This clause requires preserving assets.
The [Party] agrees to take all necessary steps to preserve its assets and ensure that they remain sufficient to meet its obligations under this Agreement. This includes maintaining insurance, reducing liabilities, and taking other actions to safeguard its financial position.
Solvency clause with an obligation to obtain solvency insurance
This clause requires solvency insurance.
The [Party] agrees to obtain solvency insurance to protect the other party in the event of insolvency. The insurance will cover the costs associated with the non-performance of obligations due to financial instability or insolvency and will be provided to the other party for review.
Solvency clause with solvency assessment during major events
This clause requires a solvency assessment during major events.
The [Party] agrees to undergo a solvency assessment whenever a major event, such as a merger, acquisition, or significant change in business structure, occurs. The results of this assessment will be provided to the other party to ensure that solvency is maintained and that obligations under this Agreement can still be fulfilled.
Solvency clause with provision for performance guarantees in case of insolvency
This clause provides performance guarantees.
In the event of insolvency, the [Party] agrees to provide performance guarantees, including a third-party guarantor or surety bond, to ensure that its obligations under this Agreement are fulfilled. The guarantee will remain in effect until the [Party] is financially stable again.
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