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I have a covenant light agreement, so do I need to care about compliance?

Asked on May 9, 2013

And, does anyone have a debt covenant compliance checklist?

This question was asked by an attendee during the Proformative webinar "Best Practices in Debt Compliance & Case Study" held on March 28, 2013. Join the discussion and add your insights below.

Answers

Barrett Peterson Senior Manager, Actg Stnds & Analysis • April 7, 2013

It depends on what comprises "light", but you should take compliance seriously. Lender reaction may be faster and more severe for covenant breaches in 'Light" covenant agreements.

Jeffrey Wallace Managing Director • April 28, 2013

A covenant checklist is really a function of what is in your debt agreements. Since there is not a standard debt agreement, there's not a standard covenant checklist. A good place to start is reviewing the affirmative and negative covenant sections in your debt agreement, but know that about 20-30% of your covenants may be outside these two sections.

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