Negative covenant

1. A covenant pursuant to which a person agrees not to take a certain action.
2. Examples of negative covenants include agreements to not create liens, to not incur debt, to not merge or sell assets and to not make specified investments.
3. The breach of most negative covenants results in an immediate event of default that gives the lender the right to accelerate the maturity of the loan or other obligation.

Copyright (c) 2002-2019 William H. Widen. All rights reserved.  ^ Page Top ^