Growth Credit Facilities: Affirmative and Negative Covenants, Permitted Baskets, Cure Rights, Lender Remedies

This CLE course will examine the overall structure of growth credit facilities, including affirmative and negative covenant packages, the "permitted" carve-outs that give borrowers operating room, and events of default that put a facility at risk. The panel will analyze structuring covenants, events of default, cure periods, and materiality qualifiers, as well as the full range of lender remedies and consensual workout options.

Covenant packages define what a borrower must do and what it cannot do for the life of a credit facility—and the "permitted" definitions determine whether the borrower can actually run its business without undue lender interference. Affirmative covenants keep the lender informed and the collateral package intact through financial reporting, inspection rights, deposit account control, subsidiary joinders, and default notices. These covenants also require certain performance standards and financial growth or stability. When covenants are tripped, defaults and remedies can follow.

Negative covenants prohibit additional debt, liens, investments, distributions, asset transfers, mergers, and affiliate transactions, subject only to negotiated exceptions. Counsel must not only understand covenant impacts but negotiate and draft them with care to avoid unnecessary friction and ensure they work as intended without compromising business operations.

Our faculty will analyze various approaches and strategies from both the borrower and lender perspectives in negotiating covenants and performance milestones. Counsel must also understand material adverse effect triggers, cross-default scope, and the knowledge and materiality qualifiers that are common in growth capital and middle-market facilities.

On the enforcement side, Article 9 remedies, account control sweeps, foreclosure, acceleration, workout scenarios, reservations of rights, waivers, and lender approaches to resolving defaulted and distressed debt will be examined in light of the underlying collateral and structure of typical middle-market facilities.

Listen as our authoritative panel examines core covenant obligations, default triggers, and lender remedies in growth credit facilities. Learn how permitted baskets, cure periods, and borrower protections shape compliance, business operation flexibility, and enforcement strategy.