Said primarily in connection with leveraged buyouts of loan agreements that contain special provisions to protect creditors. For example, the target company must generally comply with very specific balance sheet ratios that can be expressed in key figures. In the event of a breach of these contractual provisions, creditors usually have a right of rescission or are granted extended creditor rights. – See cash sweep agreement, covenant cure, financial report. – Cf. Deutsche Bundesbank Monthly Report of April 2007, p. 16 ff. (p. 16: Overview of financing structure; p. 21:
Definition of “Financial Covenants”), ECB Monthly Bulletin, August 2007, p. 102 (covenants common in leveraged buyouts).
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