Negative Pledge definition: Copy, customize, and use instantly
Introduction
The term "Negative Pledge" refers to a commitment or clause within an agreement that restricts a borrower or issuer from creating or permitting certain types of liens or encumbrances on their assets, ensuring that those assets remain unencumbered. This type of provision is often included in loan or bond agreements to protect the interests of the lender or bondholder.
Below are examples of how the term "Negative Pledge" can be defined and used in various contexts. You can copy and adapt any example that fits your needs.
Definition of "Negative Pledge" in loan agreements
A "Negative Pledge" restricts the borrower from securing any debt with their assets unless the lender is granted equal or better security.
A "Negative Pledge" in loan agreements prohibits the borrower from creating any lien or encumbrance on their assets without the prior consent of the lender, ensuring that the lender’s position is not diluted.
Definition of "Negative Pledge" in bond indentures
This definition applies "Negative Pledge" to bond indentures.
A "Negative Pledge" in bond indentures ensures that the issuer will not grant security interests over their assets that could affect the rights of bondholders.
Definition of "Negative Pledge" in corporate finance
This definition connects "Negative Pledge" to corporate finance agreements.
A "Negative Pledge" clause in corporate finance prevents a company from pledging assets to new lenders while leaving existing creditors without collateral protection.
Definition of "Negative Pledge" in a secured loan
This definition ties "Negative Pledge" to secured loans.
A "Negative Pledge" clause in a secured loan agreement ensures that the borrower will not encumber assets with additional liens that could impact the priority of the lender’s claim.
Definition of "Negative Pledge" in a covenant package
This definition links "Negative Pledge" to covenant packages.
A "Negative Pledge" in a covenant package ensures that the borrower does not grant security interests over assets without approval, preserving the lender's position relative to any new creditors.
Definition of "Negative Pledge" in a syndicated loan agreement
This definition connects "Negative Pledge" to syndicated loans.
A "Negative Pledge" in a syndicated loan agreement restricts the borrower from granting any additional security interests over its assets, safeguarding the interests of the syndicate members.
Definition of "Negative Pledge" in a revolving credit facility
This definition applies "Negative Pledge" to revolving credit.
A "Negative Pledge" in a revolving credit facility prevents the borrower from securing other loans against assets that could undermine the lender’s position in case of default.
Definition of "Negative Pledge" in an acquisition financing agreement
This definition ties "Negative Pledge" to acquisition financing.
A "Negative Pledge" in an acquisition financing agreement restricts the target company from encumbering its assets, protecting the acquiring party’s interest in the event of a change of control.
Definition of "Negative Pledge" in debt refinancing agreements
This definition connects "Negative Pledge" to refinancing.
A "Negative Pledge" in a debt refinancing agreement ensures that the borrower cannot grant security interests to new lenders unless the refinancing creditors' position is protected.
Definition of "Negative Pledge" in investment agreements
This definition applies "Negative Pledge" to investment agreements.
A "Negative Pledge" clause in investment agreements ensures that the company will not secure any new debt with its assets, providing the investor with security over the assets.
Definition of "Negative Pledge" in a real estate financing agreement
This definition ties "Negative Pledge" to real estate financing.
A "Negative Pledge" in real estate financing agreements restricts the borrower from encumbering the real estate with additional liens that could affect the lender’s interest in the property.
Definition of "Negative Pledge" in asset-backed securities
This definition connects "Negative Pledge" to asset-backed securities.
A "Negative Pledge" in asset-backed securities transactions ensures that the issuer does not encumber the underlying assets with further liens or claims, protecting the security interests of bondholders.
Definition of "Negative Pledge" in project finance agreements
This definition links "Negative Pledge" to project financing.
A "Negative Pledge" in project finance agreements ensures that no other party can place claims over the project's assets, preserving the security for lenders involved in the financing.
Definition of "Negative Pledge" in a credit agreement
This definition applies "Negative Pledge" to credit agreements.
A "Negative Pledge" clause in a credit agreement prevents the borrower from securing future debts with collateral, which would affect the seniority of the existing creditors.
Definition of "Negative Pledge" in a subordinated debt agreement
This definition ties "Negative Pledge" to subordinated debt.
A "Negative Pledge" in a subordinated debt agreement ensures that the borrower cannot grant security to senior creditors that would impair the claims of subordinated creditors.
Definition of "Negative Pledge" in investment grade debt
This definition connects "Negative Pledge" to investment-grade debt.
A "Negative Pledge" clause in investment-grade debt agreements restricts the issuer from securing any additional debt with assets, which could potentially harm the interests of existing bondholders.
Definition of "Negative Pledge" in a revolving loan agreement
This definition links "Negative Pledge" to revolving loans.
A "Negative Pledge" in a revolving loan agreement ensures that the borrower does not pledge the same assets to other lenders during the life of the loan, securing the lender's position.
Definition of "Negative Pledge" in merger agreements
This definition applies "Negative Pledge" to mergers.
A "Negative Pledge" in a merger agreement ensures that the target company does not encumber its assets with new liens that could undermine the merger's terms.
Definition of "Negative Pledge" in a debt covenant
This definition ties "Negative Pledge" to debt covenants.
A "Negative Pledge" within a debt covenant prevents the borrower from taking actions that could reduce the priority of the lender's claims, such as granting liens or encumbrances on assets.
Definition of "Negative Pledge" in cross-border financing
This definition connects "Negative Pledge" to cross-border financing.
A "Negative Pledge" in cross-border financing agreements ensures that assets across different jurisdictions are not encumbered, protecting the creditor's rights internationally.
Definition of "Negative Pledge" in private debt placements
This definition applies "Negative Pledge" to private debt placements.
A "Negative Pledge" in private debt placements prevents the borrower from encumbering assets in a way that could affect the position of private debt holders.
Definition of "Negative Pledge" in commercial loan agreements
This definition links "Negative Pledge" to commercial loans.
A "Negative Pledge" in commercial loan agreements restricts the borrower from encumbering business assets with further security interests, protecting the lender’s collateral position.
Definition of "Negative Pledge" in a debt issuance
This definition ties "Negative Pledge" to debt issuance.
A "Negative Pledge" in a debt issuance ensures that the issuer does not pledge assets as security for future debt, preserving the value of the existing debt issuance.
Definition of "Negative Pledge" in a distressed asset sale
This definition connects "Negative Pledge" to distressed asset sales.
A "Negative Pledge" in a distressed asset sale prevents the seller from using the assets as collateral in future transactions, ensuring that creditors' claims are not weakened by the sale.
Definition of "Negative Pledge" in a structured finance transaction
This definition applies "Negative Pledge" to structured finance.
A "Negative Pledge" in a structured finance transaction ensures that no additional liens are placed on the underlying assets that could adversely affect the structure’s cash flow or asset value.
Definition of "Negative Pledge" in a credit facility agreement
This definition ties "Negative Pledge" to credit facility agreements.
A "Negative Pledge" in a credit facility agreement ensures that the borrower does not place any liens or encumbrances on their assets that could impair the lender’s security interest.
Definition of "Negative Pledge" in a debt restructuring
This definition connects "Negative Pledge" to debt restructuring.
A "Negative Pledge" in a debt restructuring ensures that the borrower does not pledge assets to new creditors in a way that dilutes the claims of existing creditors.
Definition of "Negative Pledge" in a structured note offering
This definition applies "Negative Pledge" to structured notes.
A "Negative Pledge" in a structured note offering restricts the issuer from encumbering any underlying assets, preserving the value of the notes for investors.
Definition of "Negative Pledge" in a financial covenant
This definition ties "Negative Pledge" to financial covenants.
A "Negative Pledge" in a financial covenant ensures that the borrower does not create liens that would negatively impact the creditor's financial position or recovery in case of default.
Definition of "Negative Pledge" in asset-backed lending
This definition connects "Negative Pledge" to asset-backed lending.
A "Negative Pledge" in asset-backed lending restricts the borrower from pledging additional assets that would undermine the value or liquidity of the collateral for the existing lenders.
Definition of "Negative Pledge" in syndicated lending agreements
This definition links "Negative Pledge" to syndicated lending.
A "Negative Pledge" in syndicated lending agreements ensures that the borrower cannot create any liens on their assets without first obtaining the consent of the syndicate members.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.