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

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
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

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
Title: Managing Director
Company: Debt Compliance Services LLC
(Managing Director, Debt Compliance Services LLC) |

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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