Loan Covenants
Conditions/restrictions imposed by lender in loan agreement.
Real World
When Toys R Us breached its debt covenants in 2017 by missing financial ratio targets, lenders accelerated repayment demands — triggering the bankruptcy that closed all 800 US stores.
Exam Focus
In 'analyse' questions, explain the consequence of a breach (accelerated repayment) not just what a covenant is.
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