medium · Private Credit documentation-covenants-terms
Why would a lender require a 'Share Pledge' over the material subsidiaries of a borrower?
- To guarantee that the subsidiaries will remain profitable during the loan term.
- To prevent the subsidiaries from ever launching new products without the lender's prior consent.
- To ensure the subsidiaries' employees are always paid directly out of the lender's designated bank account.
- To allow the lender to take ownership of the subsidiaries quickly in an enforcement scenario.
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