Restricted Payment definition: Copy, customize, and use instantly
Introduction
The term "Restricted Payment" refers to a limitation on certain payments or distributions, often found in financial agreements or loan covenants. These payments are typically restricted in order to preserve the financial stability of the borrower or ensure that sufficient funds remain available for debt servicing and other critical obligations. Understanding restricted payments is essential for ensuring compliance with financial covenants and protecting the interests of creditors.
Below are various examples of how "Restricted Payment" can be defined in different contexts. Copy the one that fits your needs, customize it, and use it in your contract.
Definition of "Restricted Payment" as a prohibited payment under a loan agreement
This definition ties "Restricted Payment" to its role in loan agreements.
"Restricted Payment" means any payment or distribution made by the borrower to its shareholders, partners, or affiliates, which is prohibited or limited under the terms of the loan agreement to ensure that sufficient funds remain for debt servicing.
Definition of "Restricted Payment" as a dividend distribution limitation
This definition connects "Restricted Payment" to dividend payments.
"Restricted Payment" refers to any dividend, distribution, or similar payment made to equity holders that is restricted or subject to limitations under the terms of an agreement to ensure that the financial condition of the borrower or issuer is not adversely affected.
Definition of "Restricted Payment" as a limitation on asset transfers
This definition links "Restricted Payment" to asset transfers.
"Restricted Payment" means any transfer of assets or funds from the borrower to its affiliates or related parties that is restricted under the agreement to protect the lender's interests and ensure that the borrower maintains sufficient liquidity for operations.
Definition of "Restricted Payment" as a payment subject to financial conditions
This definition applies "Restricted Payment" to financial conditions.
"Restricted Payment" refers to any payment made by the borrower, which is subject to the borrower meeting certain financial conditions or covenants, such as maintaining a specified debt-to-equity ratio or liquidity level.
Definition of "Restricted Payment" as a payment involving indebtedness
This definition ties "Restricted Payment" to payments involving debt.
"Restricted Payment" means any payment or distribution made by the borrower that could potentially increase its indebtedness or reduce available cash flow, which is restricted to maintain the borrower's financial health and ability to repay its debts.
Definition of "Restricted Payment" as a payment to shareholders
This definition connects "Restricted Payment" to payments made to shareholders.
"Restricted Payment" refers to any distribution or payment made by the company to its shareholders, owners, or equity holders, that is limited or prohibited under the terms of a financing agreement to avoid impacting the company’s ability to meet financial obligations.
Definition of "Restricted Payment" as a financial covenant breach
This definition links "Restricted Payment" to covenant breaches.
"Restricted Payment" means any payment or distribution that violates or causes a breach of the financial covenants set forth in an agreement, including debt service coverage ratios or other key financial metrics.
Definition of "Restricted Payment" as a transfer of funds to affiliates
This definition applies "Restricted Payment" to transfers to affiliates.
"Restricted Payment" refers to any transfer of funds, assets, or value from the borrower to its affiliates, subsidiaries, or related parties, which is limited or prohibited under the terms of the credit agreement to protect the lender's interests.
Definition of "Restricted Payment" as a limitation on capital expenditures
This definition ties "Restricted Payment" to capital expenditures.
"Restricted Payment" means any expenditure or payment related to capital expenditures that exceeds certain limits specified in the agreement, which could affect the financial stability of the borrower.
Definition of "Restricted Payment" as an agreement-imposed limitation
This definition connects "Restricted Payment" to contract limitations.
"Restricted Payment" refers to any payment or distribution that is restricted or limited under the terms of a contract or agreement, such as a loan, to protect the lender’s or creditor’s interests by ensuring sufficient capital remains with the borrower.
Definition of "Restricted Payment" as a non-compliant distribution
This definition links "Restricted Payment" to non-compliance.
"Restricted Payment" means any payment or distribution made by the borrower that does not comply with the terms or conditions stipulated in the agreement, such as a distribution exceeding allowable amounts or made in violation of specified financial ratios.
Definition of "Restricted Payment" as a payment subject to approval
This definition applies "Restricted Payment" to payments requiring approval.
"Restricted Payment" refers to any payment, distribution, or transaction that requires the prior approval of the lender or other stakeholders, ensuring compliance with the financial structure of the agreement.
Definition of "Restricted Payment" as a payment with covenants
This definition ties "Restricted Payment" to covenant requirements.
"Restricted Payment" means any payment, distribution, or transaction that is subject to specific covenants in the financing agreement, such as maintaining certain liquidity or profitability levels before such payments can be made.
Definition of "Restricted Payment" as a payment limited by financial performance
This definition connects "Restricted Payment" to performance-based limits.
"Restricted Payment" refers to any payment or distribution made by the borrower that is limited based on the company’s financial performance, such as meeting a required earnings threshold before payments can be made.
Definition of "Restricted Payment" as a limitation based on profitability
This definition links "Restricted Payment" to profitability.
"Restricted Payment" means any payment or distribution that is only allowed if the borrower meets certain profitability thresholds, ensuring that financial obligations are met first before making such payments.
Definition of "Restricted Payment" as a payment subject to debt reduction
This definition ties "Restricted Payment" to debt reduction.
"Restricted Payment" refers to any payment or distribution that is allowed only after a portion of the outstanding debt has been repaid or reduced, ensuring that the borrower maintains a reasonable debt level.
Definition of "Restricted Payment" as a payment within defined parameters
This definition connects "Restricted Payment" to set parameters.
"Restricted Payment" means any payment or distribution that is only permitted within specific parameters or conditions, such as percentage limits of earnings or cash flow.
Definition of "Restricted Payment" as an exception to payment policies
This definition links "Restricted Payment" to exceptions.
"Restricted Payment" refers to any exception to general payment policies, allowing for payments or distributions only under specific circumstances or with the approval of designated parties.
Definition of "Restricted Payment" as a controlled disbursement
This definition ties "Restricted Payment" to controlled disbursements.
"Restricted Payment" means a disbursement of funds that is subject to controls or limitations set by the terms of a credit agreement, designed to protect the financial stability and interests of the lender or creditor.
Definition of "Restricted Payment" as a limitation on equity distributions
This definition ties "Restricted Payment" to equity distributions.
"Restricted Payment" means any distribution or payment to the equity holders of the borrower, which is restricted under the terms of the agreement to ensure that the borrower retains adequate cash flow to meet its obligations.
Definition of "Restricted Payment" as a prohibition on dividends
This definition connects "Restricted Payment" to dividend payments.
"Restricted Payment" refers to the prohibition or limitation on the declaration or payment of dividends or other distributions to equity holders, unless certain conditions are met.
Definition of "Restricted Payment" as a limitation on intercompany transactions
This definition links "Restricted Payment" to intercompany transactions.
"Restricted Payment" means any payment or transfer of funds from the borrower to its affiliates, subsidiaries, or related entities, which is restricted under the terms of the agreement to preserve the financial integrity of the borrower.
Definition of "Restricted Payment" as a condition based on financial performance
This definition applies "Restricted Payment" to performance-based conditions.
"Restricted Payment" refers to any payment or distribution that is subject to the borrower achieving specified financial performance metrics, such as a minimum debt service coverage ratio, before such payments are allowed.
Definition of "Restricted Payment" as a payment that affects the borrower’s debt structure
This definition ties "Restricted Payment" to debt structure considerations.
"Restricted Payment" means any payment or distribution that could impact the borrower’s debt structure or impair its ability to meet debt obligations, and thus is subject to limitations under the loan agreement.
Definition of "Restricted Payment" as a payment to insiders
This definition connects "Restricted Payment" to payments to insiders.
"Restricted Payment" refers to any payment, distribution, or transfer of assets to insiders, such as executives or controlling shareholders, that is restricted to prevent any adverse impact on the borrower’s financial health.
Definition of "Restricted Payment" as a limitation on principal repayments
This definition links "Restricted Payment" to principal repayments.
"Restricted Payment" means any repayment of principal on subordinated debt or other liabilities that is restricted to ensure the borrower has adequate liquidity to meet senior debt obligations.
Definition of "Restricted Payment" as a payment prohibited under a debt covenant
This definition applies "Restricted Payment" to debt covenants.
"Restricted Payment" refers to any payment or distribution prohibited under a specific debt covenant, designed to limit the borrower’s ability to divert funds from the business to other purposes.
Definition of "Restricted Payment" as a conditional approval for dividends
This definition ties "Restricted Payment" to conditional approval for dividends.
"Restricted Payment" means any dividend or distribution that requires the prior approval of the lender or another designated authority to ensure compliance with financial covenants and maintain liquidity.
Definition of "Restricted Payment" as a distribution affected by debt-to-equity ratio
This definition connects "Restricted Payment" to financial ratios.
"Restricted Payment" refers to any distribution or payment that is limited by the company’s debt-to-equity ratio, ensuring that such distributions do not impair the company’s ability to meet its debt obligations.
Definition of "Restricted Payment" as a limitation on payments to shareholders
This definition links "Restricted Payment" to payments to shareholders.
"Restricted Payment" means any payment or distribution to shareholders, which is restricted under the agreement to preserve the company’s financial stability and ensure that adequate resources remain available for debt service.
Definition of "Restricted Payment" as a limitation based on cash flow
This definition applies "Restricted Payment" to cash flow conditions.
"Restricted Payment" refers to any payment that is allowed only if the borrower’s cash flow is sufficient to cover both the payment and all other financial obligations, as specified in the agreement.
Definition of "Restricted Payment" as a payment to affiliates or related parties
This definition ties "Restricted Payment" to related party transactions.
"Restricted Payment" means any payment or transfer of assets to affiliates or related parties, which is limited under the terms of the agreement to avoid potential conflicts of interest or depletion of resources.
Definition of "Restricted Payment" as a condition related to profitability
This definition connects "Restricted Payment" to profitability.
"Restricted Payment" refers to any payment or distribution that is subject to the borrower achieving specified levels of profitability, such as a minimum operating income or net profit margin.
Definition of "Restricted Payment" as a prohibition on excessive payments
This definition links "Restricted Payment" to limiting excessive payments.
"Restricted Payment" means any excessive or disproportionate payments that exceed limits set by the agreement, aimed at preventing the borrower from depleting funds required for its ongoing operations.
Definition of "Restricted Payment" as a payment contingent upon reserve requirements
This definition applies "Restricted Payment" to reserve requirements.
"Restricted Payment" refers to any payment that is contingent on the borrower maintaining certain reserve levels, ensuring that payments do not impair the borrower’s ability to meet future obligations.
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.